The following paper was presented at the workshop of the International Institute of Labour Studies (IILS) on “Cross-Border Social Dialogue and Agreements: an Emerging Global Industrial Framework?”, ILO, Geneva, December 15 and 16, 2006. Together with the other papers presented at the workshop, a version of this paper has been published as an ILO/IILS publication in 2008 under the title of the workshop.

Introduction
Soon it will be twenty years since the first agreement between an international
trade union organization and a transnational corporation (TNC) was signed.
Sixty such agreements or International Framework Agreements (IFAs), have
been signed since and it may be assumed that more will be signed in the
coming years. A considerable body of academic and trade union literature has
developed to discuss their significance. It seems appropriate at this point to
review this discussion in the light of what was originally intended, of what has
developed since, and of future prospects.
This chapter depicts a number of historical events, which constitute key
benchmarks in the emergence of trans-national labour/management relations
and agreements. We first explain the original intention of the trans-national
negotiations undertaken between the International Trade Secretariats (ITSs)
and TNCs in the 1960s (section 1), as well as lessons drawn from this original
experience (section 2). We then focus on the history of first IFA (Danone,
1988) and the reasons which might have motivated the TNC in reaching this
agreement (section 3). We then highlight the differences between IFAs and
corporate codes of conduct (section 4) and the relation between IFAs and
European Works Councils (section 5). We conclude by discussing the issue of
whether IFAs can still be considered to constitute elements of an emerging
global labour relations architecture, within a political and economic context
increasingly hostile to trade union rights.
1. The Original Intention
It is not difficult to trace back the origins of the International Framework
Agreements (IFAs). They originate in the response, in the 1960s, of three
International Trade Secretariats (ITSs, now renamed Global Union
Federations or GUFs) to the growing influence of transnational corporations
on industrial relations, also and especially at national level.
The three ITSs were the International Federation of Chemical and General
Workers’ Unions (ICF), the forerunner of the present International Federation
of Chemical, Energy, Mine and General Workers’ Unions (ICEM), the
International Metalworkers’ Federation (IMF) and the International Union of
Food and Allied Workers’ Associations (IUF), the forerunner of the present
International Union of Food, Agricultural, Hotel, Restaurant, Catering,
Tobacco and Allied Workers’ Associations.
The International Transport Workers’ Federation (ITF) was of course the first
ITS to conclude international agreements with employers’ federations in the
maritime industry and is thus the pioneer of international collective bargaining.
Most recently, in 2000, the ITF concluded a sectoral agreement with the
International Maritime Employers’ Committee (IMEC). This, however, is a
special case that should be examined separately (see, Lillie in this volume
who examines a key episode in the history of the cross-border social dialogue
in the maritime shipping industry, i.e., the adoption of a consolidated ILO
Maritime Labour Convention following global trade union campaign against
flag of convenience shipping and negotiations between the ITF and ship-
owners).
The three industrial ITSs were inspired by the American example of co-
ordinated bargaining or coalition bargaining, which had been developed by
unions in the Congress of Industrial Organizations (CIO), particularly the
United Auto Workers’ Union under the leadership of its president Walter
Reuther. After the merger of the American Federation of Labor (AFL) and the
Congress of Industrial Organizations (CIO) in 1955, the Industrial Union
Department of the AFL-CIO continued this strategy.
The basic idea was simple: to prevent the existing fragmentation of the
movement to become a factor of division and weakness when bargaining with
a multi-plant corporation:
“In the United States, trade union jurisdictional lines in certain
industries are extremely blurred […] This results in several unions
having bargaining rights for different plants of the company. Each is
therefore confronted by the total combined strength of the company
although it may be bargaining with a local plant official […] To offset
this very great disadvantage in power at the bargaining table, the
Industrial Union Department of the AFL-CIO (IUD) has developed a co-
ordinated bargaining program. Under this plan all unions with collective
bargaining rights within a plant of a given company work out their
demands and bargaining strategy jointly. Thus a company would have
a single set of demands and a single strategy to contend with, backed
by a number of different unions in a common front. Although still in its
initial stages, this plan has already achieved some notable successes,
particularly with General Electric, Westinghouse and other companies.”
(Levinson 1972: 103-104).
The same factors which led North American unions to adopt the coalition
bargaining strategy would apply even more at international level, where by
definition, in almost all cases, different national unions would hold bargaining
rights in different production sites of the same company. (1) Consequently, the
necessity of working out “their demands and bargaining strategy jointly” would
be even more compelling in terms of the objective of building an international
countervailing union force to counter the “combined strength of the company”
and it would make the coalition bargaining strategy even more relevant.
However, in addition to working towards creating an international collective
bargaining situation where union and management power would be more
evenly balanced, in seeking to co-ordinate union activities at TNC level the
ITSs also responded to the perceived need of their member unions for mutual
support in conflict situations, whether within a formal bargaining framework or
not.
In the event, the ICF itself successfully practiced this strategy in many
instances, starting in the middle 1960s (Levinson, 1972: 112-17). The ICF
action against the Saint-Gobain glass company in 1969 attracted international
attention. It was simultaneously conducted in four countries including a
twenty-six day strike in the United States, and it was the first major
international trade union action based on the principle of coalition bargaining
in the post-war period.
The IMF based its response to transnational corporations on similar
principles, starting in the automobile industry. The first IMF auto workers’
conference focusing on TNCs was held in Paris in 1959. Successive
conferences in the 1960s progressively built up a strategy of World Auto
Company Councils for the nine world corporations, accounting at the time for
80 percent of the Western world’s production. The first three World Auto
Councils (Ford, General Motors and Chrysler) were set up in June 1966, the
fourth (Volkswagen-Mercedes Benz) was established in November 1966, and
the fifth (Fiat-Citroën) in November 1968.
Through these world councils, the IMF organised specific actions, such as the
participation of an experienced negotiator from the union in the country of the
parent company in local negotiations at a subsidiary location. They also
organised communication of economic and collective bargaining information
between unions operating in the same company and intervention by unions
who had the support of the parent company in strikes at subsidiary plants.
A conference of the IMF World Auto Company Councils, held in London in
March 1971, defined specific demands for each of the councils and adopted a
declaration which stated in part:
“On the collective bargaining front it is imperative that the centralized
control of the international corporations be countered by the closest
possible co-ordination of unions in all nations representing the workers
of each such corporation […] Help must be given, in every country
where it is needed, to organize the still unorganised workers of such
corporations. Collective bargaining rights, including the right to strike,
must be won in every country where they are now denied. National
affiliates of the IMF must be provided with all the help they require to
strengthen their organizations and to train their members and leaders
to bargain more effectively with their employers.
“We call for meetings of representatives of each of the IMF World Auto
Company Councils with the top policy-makers of these respective
international corporations. Among the priority items to be discussed at
such meetings are information concerning investment and production
plans and job security.
“Common expiration dates should be established for collective
bargaining contracts in all nations, corporation by corporation, so that
the full weight of the totality of the firm’s organized workers can be
brought to bear upon each corporation, under conditions in which all
unions involved are free of contractual restrictions.”
In 1967, the IMF had established a Commission for Multinational Corporations
to co-ordinate its general policy in this area. The action program was
extended beyond the auto industry to the machine and electrical engineering
industries, with international meetings of unions in General Electric,
International Harvester, Philips and Honeywell, among others.
Also in 1967, the IMF established a European Committee of Metal Trade
Unions, as a co-ordinating body of the IMF in what was then the European
Economic Community. This Committee worked to establish bargaining rights
with several transnational corporations, but focused particular attention on
Philips, the Dutch electronics industry corporation.
The unions’ short-term objective was an agreement securing parity of
treatment of workers employed by Philips in different countries, as well as the
protection of workers affected by technological change. A longer term goal
was an international collective bargaining agreement covering working
conditions (including wages and hours) and union rights and representation in
the plants.
From 1967 to 1970, three meetings were held between representatives of the
European Committee and Philips management officials. In the first meeting
(September 1967), the discussions centred on the effect on employment and
wage rates of changes in production processes resulting from technological
innovation and from international production transfers. An agreement was
reached to hold further discussions at a later date.
At the second meeting (June 1969) management agreed that unions would be
given previous notice of important transfers of production from one country to
another and of any changes in the limits set on production within individual
plants. Management also agreed to consider union proposals on readjustment
and vocational training measures for workers affected by technological
change.
The third meeting (September 1970) dealt primarily with work organisation
and future developments of the company’s economic activities. Philips
representatives agreed to consider the European Committee’s demands for a
permanent labour-management liaison committee, a comprehensive labour
policy and of discussions at international level in advance of proposed layoffs
and international transfer of employees. They also agreed that if production
transfers were undertaken, the “redundant” workers would be guaranteed full
wages and social security contributions for at least six months and that
special protection would be extended to worker over fifty years old.
After this meeting the Philips management apparently decided against
continuing to engage with the unions in a discussion of their labour relations
at international level. A fourth meeting, planned for 1971, was to discuss the
possibility of establishing a permanent joint advisory committee which would
examine employment, social policy and industrial relations problems within
the Philips group, but “owing to the company’s increasing hesitancy” this was
indefinitely postponed (Levinson, 1972: 132).
A “Philips European Forum” was formed in 1996 as a European Works
Council (EWC) under Article 13 of the EU directive. Like other EWCs, its
mandate is limited to “information and consultation”. In February 2001, the
IMF held its first Philips World Conference, with about 60 participants from 18
countries, which established a Steering Committee and a Task Force to build
an effective information network. The conference also considered that the
establishment of a World Works Council, “to complement the existing
European Works Council (European Philips Forum – EPF)” was necessary,
because “Philips gears its decision-making to the global level. The emerging
trend whereby production plants are moved to low-wage countries requires a
global organization of trade unions and company employee representatives.”
(IMF, 2001). There is no IFA covering Philips.
The International Union of Food and Allied Workers’ Associations (IUF) had
taken an active interest in international co-ordination of trade union bargaining
since 1958, when it undertook a comparative survey of wages and working
conditions in British-American Tobacco (BAT). The issue was also on the
agenda of sectoral conferences in 1961, for the meat and tobacco companies.
BAT was in fact the first company where the IUF organised solidarity action
between member unions in different countries representing workers in the
same TNC.
The action was in defence of the Pak Cigarette Labour Union (PCLU), which
represented workers at the Pakistan subsidiary of BAT. The PCLU was
formed in 1961 but was denied recognition. Instead, the union faced lockouts,
arrests, dismissals and fines. In February 1963 the union went on strike
during which its general secretary was jailed for four months and twelve union
members were dismissed. The IUF organized financial support for the
dismissed workers and called on its members at BAT to raise the issue with
their local management. In December, the general secretary of the British
Tobacco Workers’ Union, Percy Belcher, travelled to Karachi officially
representing the IUF and helped bring about negotiations between the union
and the company. These negotiations resulted in the reinstatement of the
dismissed workers and of the union’s general secretary, as well as in the first
ever collective bargaining agreement reached between any union and
employer in Karachi.
In May 1964, the issue of TNCs was on the agenda of the 14th Congress of
the IUF in Stockholm, which adopted the following Resolution on International
Collective Bargaining:
“The Fourteenth Statutory Congress of the International Union of Food
and Allied Workers’ Associations, meeting in Stockholm from May 27 to
30, 1964:
CONSIDERING the dominant position of international companies in all
aspects of economic and social life;
CONSIDERING the growing ability of such companies to mobilize their
full international potential in collective bargaining with single national
unions;
CONSIDERING the threat arising to national trade union organizations
from inadequate communication and coordination in their dealings with
international companies;
DIRECTS the Executive Committee to take all appropriate measures to
secure the recognition of the IUF as an international negotiating body
and to perfect an appropriate procedure for conducting international
negotiations in the food and allied industries under IUF sponsorship.”
Following the congress, the IUF approached BAT with the proposal to
establish a permanent joint negotiating body but did not meet with a positive
response. However, the IUF continued to organise international coordination
at TNC level, typically in the context of a conflict situation.
One such action was in support of a strike by the US Bakery and
Confectionary Workers’ Union in October 1969 against the National Biscuit
Co. (Nabisco), involving unions from ten countries where Nabisco had
subsidiaries. The strike was successfully ended two weeks after the initial call
for international solidarity.
The 16th IUF Congress held in Zurich in July 1970 again noted the
concentration of power taking place at international company level and
stressed the need to strengthen union co-operation at that level. It called for
regular meetings of unions representing workers in the major TNCs as well as
for ad hoc meetings in emergencies and for exchanges of union delegations
to observe each others’ negotiations within the same TNC.
In May 1972, in Geneva, the IUF held its first World Conference of Nestlé
Workers, which established a Nestlé Permanent Council. The tasks of the
Council were to: (a) contact the management of Nestlé Alimentana SA on
international questions or at the request of affiliates; (b) call future Nestlé
conferences; and (c) follow up on the decisions of the Conference.
The Conference adopted a statement which formulated demands on job
security and wages policy, but also on the respect of union rights and on
union participation in management policy decisions.
The statement also included a political demand: it invited Nestlé to “contribute
to the development of underdeveloped countries” in particular by the following
measures:
> ensure the equitable distribution of its subsidiaries’ revenues,
whether in the form of wages or taxes;
> bring the prices of Nestlé products to a level where all
consumers will be able to purchase them;
> bring its influence to bear to guarantee fair prices for the primary
commodities which it processes;
> follow a policy of processing primary commodities where these
originate, without thereby creating employment problems in its
subsidiaries located in industrialized countries.
Finally, the participating unions agreed to “increase, through the IUF
secretariat, the exchange of information and experiences concerning their
relations with Nestlé, thereby laying the groundwork for more effective co-
operation at the level of the company” and to “mutually support their demands
and their struggles.”
It was also decided that the IUF secretariat should publish a Nestlé bulletin
and such a bulletin did appear on an approximately monthly basis until most
IUF periodical publications were replaced by a web site in the late 1990s.
In June 1972, a delegation of the IUF Permanent Council met with Nestlé
management at the company headquarters in Vevey to discuss the
conclusions of the World Conference, after having agreed that these talks
could not become a substitute for management/labour relations at the national
level.
The management representatives assured the IUF delegation that the
company considered good relations with the unions of utmost importance and
in particular attached importance to the respect of trade union rights by its
associated companies and subsidiaries, that Nestlé intended to make the
safeguarding of jobs a priority, and it would seek an understanding with
workers’ representatives on the material and social impacts of lay-offs
resulting from rationalisation measures.
The management representatives also said that the company would issue
appropriate recommendations to companies manufacturing or distributing
Nestlé products whenever such companies would not observe the parent’s
firm policy on these two issues.
Concerning Nestlé’s role in the “underdeveloped countries”, the company
stated its desire to contribute to the establishment of equitable prices for
primary commodities, particularly for coffee and cocoa, at a level which would
permit the development and consumption in producing countries.
Both parties agreed that further meetings between representatives of the IUF
Permanent Council and the Nestlé management should take place at the
request of either of them.
However, relations soured in 1973 when Nestlé management refused to
discuss the anti-union policies of Stouffer Foods, a recent acquisition in the
US, and when it refused to intervene in a conflict at the Chiclayo plant of
Perulac, its subsidiary in Peru.
The dispute in Chiclayo occurred when the workers who had struck in
sympathy with a walk-out at another Nestlé plant in Lima (Maggi) returned to
work on April 10 to find that non-union workers were the only ones being paid
for strike days. This resulted in another strike which lasted six weeks, with the
workers occupying the plant. In a solidarity action organized by the IUF,
unions representing Nestlé workers in fifteen countries supported the strike. A
decisive intervention by the New Zealand Dairy Workers’ Union, which
threatened to close down the Nestlé powdered milk plant which supplied all
Nestlé operations on the South American Pacific coast, tilted the balance.
The final settlement on May 23 met all the demands of the Perulac Workers’
Union: a lump sum to be paid to the union to allow it to compensate its
members for loss of earnings during the strike, a 20 percent wage increase,
paid holidays up from 15 to 20 per years, dropping all charges against union
members and a commitment by management to cease discrimination against
them, and retroactive recognition of the legality of the strike by the Peruvian
government (which had it declared illegal on May 2).
However, the IUF regional secretary for Latin America, who had visited the
union during the strike was arrested on May 5 and expelled from the country
on May 9. In July, he returned to Peru and was only subjected to a short
police interrogation, but almost a year later, the regional secretary and the
general secretary of the IUF again visited Peru, having been invited by the
Perulac union to participate in the inauguration of its new premises. On March
24, 1974, they were arrested in Chiclayo by security police led by an official
who held a paper with Nestlé letterhead in his hand (2). They were then transferred
to Lima and expelled on March 26.
After that, relations between the IUF and Nestlé became decidedly frosty for
several years. A thaw set in 1989 when the then IUF president Günter
Döding, also president of the German Food and Allied Workers’ Union NGG,
met with Helmut Maucher, Nestlé CEO whom he had known as director of
Nestlé Germany, and over dinner decided that Nestlé could recognise the IUF
as its international social counterpart.
This led to a resumption of annual meetings between a reconstituted IUF
Nestlé Council and Nestlé management, but only at European level. These
meetings were eventually formalised in 1996 as an EWC (the “Nestlé
European Council for Information and Consultation – NECIC). Nestlé has,
however, so far refused to sign an IFA with the IUF.
Except for two informal agreements on training and equal opportunities, such
agreements as exist are only procedural (frequency of meetings, composition
of the delegations, countries to be included). Even on procedure, contentious
issues arose: the IUF insisted that the workers’ side should only include union
members (officials and lay members from the production sites), Nestlé wanted
to include an “independent” union in Spain the IUF did not recognise. The IUF
also wanted the meetings to cover all of geographical Europe, whereas Nestlé
wanted only EU countries included. The trade union issue was eventually
resolved on IUF terms but the geographical issue only partially resolved.
As a parallel activity, the IUF also convened regional Nestlé meetings: most
recently, for Asia and the Pacific in Manila (1999) and Jakarta (2002), for
Eastern Europe in Lviv (2003) and for Africa in Cape Town (2003). The
seventh Nestlé conference for Latin America took place in Buenos Aires in
2003. The director of corporate human relations attended some of these
recent regional meetings. Since 2004, the IUF has established a network of
regional Nestlé co-ordinators based in Bangkok, Johannesburg, Montevideo
and Moscow.
In 1998, Nestlé adopted “Corporate Business Principles” which affirm, among
other things, the “respect of the right of employees to join legally recognized
labour unions”. However, the establishment of formal mechanisms of
communication between the IUF and Nestlé did not reduce the number of
conflicts. In all parts of the world, including Europe, unions have been in
conflict with local Nestlé managements in recent years over a wide variety of
issues, including union rights issues.
2. Conclusions from Experience
The main conclusion that can be drawn from the experience of the ICF, IMF
and IUF in the 1960s and 1970s is that their work in co-ordinating
international union activities at TNC level was in fact a basic trade union
response to a new development affecting the structure of their employer
counterparts: the concentration of capital and the shift of the place where
corporate power was exercised and decisions made from the national to the
international level.
This response was intended to be a strategy of trade union struggle and it
was motivated by the need to make this struggle more effective under the new
conditions, which affected industrial relations world wide. International co-
ordination was viewed as a tool through which unions could build up a
countervailing power comparable to that of the TNCs they were facing and
level the proverbial playing field.
From that perspective, international framework agreements, although a logical
outcome of international negotiations, were not the principal objective. The
principal objective was rather to build union strength at TNC level to achieve
any number of basic trade union aims, such as successfully conducting
solidarity actions. This is something the ITSs would have had to do in any
event, and it is still part of their basic functions, whatever institutional form it
may take.
No IFAs existed in the 1960s and 1970s and those few companies (for
example, BAT, Philips, Nestlé) which had agreed to meet with ITS delegations
to discuss industrial relations problems affecting their entire operations quickly
drew back when they realised that the ITSs involved expected some form of
binding commitment and serious changes in their corporate practices.
Although disappointing, this did not stop the ITSs from further building union
coalitions and organizing at TNC level.
The situation may best be understood by comparing the international with the
national or even local level. Trade unions exist to defend the interests of their
members in a variety of ways over a wide range of issues; they do not exist
exclusively for the purpose of concluding collective bargaining agreements
(CBAs), although this is part of their normal activities. But when it comes to
bargaining, because they must defend their members’ interests against
opposing interests, trade unions must always be prepared for conflict and
organise for conflict, even as they negotiate. A collective bargaining
agreement is, in an institutionalised form, the temporary outcome of a conflict
situation, whether latent or open, soft or hard. It reflects, in an institutionalised
form, the balance of power, at any given time, between the contracting
parties. This is why there are strong and weak agreements.
International collective bargaining is only different insofar as there is no
international legal framework, such as exists in most countries at national
level, to provide a guaranteed legal status to any labour/management
agreement reached at international level. Since such agreements are
therefore entirely voluntary, they depend even more on the balance of power
between the contracting parties at the time they are concluded. This is why
there are strong and weak IFAs, and this is also the reason why there are so
few of them.
3. The First International Framework Agreement
The first international framework agreement was signed by the IUF and the
French transnational food company BSN, (re-named Danone in 1994), on
August 23, 1988. It is entitled “Common Viewpoint IUF/BSN” and states that
the parties agree to promote co-ordinated initiatives, throughout the BSN
group, on four issues:
1. A policy for training for skills in order to anticipate the
consequences of the introduction of new technologies or industrial
restructuring. To achieve this objective, the social partners will seek to
integrate this aspect into present and future plans for training;
2. A policy aiming to achieve the same level and the same quality
of information, both in the economic and the social fields, in all
locations of BSN subsidiaries. To achieve this objective, the social
partners concerned will seek, both through national legislation as well
as collective agreement, to reduce the differences observed in terms of
the information between one country and another or between one
location and another;
3. A development of conditions to assure real equality between
men and women at work. Developing jobs and work processes have
led to distortions between the situation of men and women; the social
partners will therefore evaluate, location by location, the nature of the
different initiatives to be adopted to improve the situation;
4. The implementation of trade union rights as defined in ILO
conventions Nos. 87, 98 and 135. The social partners concerned will
identify where progress can be made in improving trade union rights
and access to trade union education.”
The adoption of the “Common Viewpoint” was preceded by a number of
meetings, since 1984, between an IUF delegation, normally composed of the
IUF general secretary, a member of the IUF staff responsible for coordinating
BSN activities and representatives of the French IUF affiliates (the CFDT and
Force Ouvrière food workers’ unions), with Danone management, normally
composed of Antoine Riboud, CEO, the director of human resources and a
member of his staff.
In 1986, a first meeting between the management and delegates from IUF
affiliates in Belgium, France, Germany and Italy with membership in BSN was
organized by the IUF in Geneva. This meeting was the first of annual
meetings which have regularly taken place since, with growing participation,
to include all of geographical Europe and representation from the rest of the
world. On the management side, central management (the CEO, HR director
and staff), as well as all national directors in Europe, would participate. The
joint meeting would last one day; the workers’ group meets the day before to
prepare and the day after for evaluation and to discuss the follow-up. The
company bears the expenses of all meetings. The IUF appointed a
coordinating union (the CFDT Food Workers’ Union) for the Workers’ Group
and its national officer responsible for Danone would chair the joint meetings.
It was agreed that all IUF/Danone agreements would cover the entire
operations of the company in all parts of the world. Neither the agreements,
nor the joint meetings, nor their agenda, were therefore “European” in nature,
but worldwide in scope. Unions representing Danone workers outside of
Europe (Africa, Asia/Pacific, Latin America and, for some years, North
America) would be represented at the joint meetings by the IUF regional
secretaries for these regions. In some meetings, unions from outside Europe
also participated.
Follow-up agreements to the “Common Viewpoint” were concluded in 1989
(on economic and social information for staff and their representatives, and on
equality at work for men and women), in 1992 (on skills training), and in 1994
(on trade union rights). In 1997, a further agreement was signed on measures
to be taken in the event of changes in business activities affecting
employment or working conditions. This agreement, the first of its kind at
international level, served as a basis for a specific agreement on social
standards applicable to all plants affected by the industrial restructuring plan
of 2001 for biscuit operations in Europe.
Following the adoption by the EU of its European Works Council directive in
1994, an agreement establishing a Danone information and consultation
committee was signed in 1996. The IUF commented as follows:
“This committee, although functioning within the framework or European
legislation, continues the work carried out by the IUF since 1984 on behalf of
its affiliates and also continues the positive features characteristic of Danone-
IUF relations since 1984:
> trade union recognition
> at enterprise level: workers’ representatives are exclusively
trade union delegates;
> at national level: full-time national officers are included in the
trade union delegation;
> at international level: the secretariats of the IUF and of the ECF-
IUF are members of the new structure and the other regional
secretaries of the IUF represent Danone workers outside Europe.
Danone accepts that in a transnational company with a global spread
of activities, the international trade union movement represents the
global counterpart.
> shared responsibilities: the themes for discussion are decided
jointly, and the meetings are chaired by the IUF international co-
ordinator Pierre Laurent.
> Finally, the committee does not confine itself in an information
and consultation role, as the EU legislation suggests, but continues the
momentum of IUF-Danone relations by being a forum for negotiations
on the crucial issues of concern to all Danone workers. (IUF, 1997)
The Danone agreement, including its subsidiary agreements, remains the
most far-reaching IFA to this day, and has set the pattern for further IUF
agreements with TNCs (Accor, Chiquita, Fonterra) and others (Tørres and
Gunnes, 2003: 9).
There has been some speculation as to why Danone was the first company to
agree to an IFA of this nature. The personal views of Antoine Riboud, its
founder and CEO until 1996 when he was succeeded by his son Franck, were
undoubtedly an important factor. Antoine Riboud, who died in 2002, was a
progressive Catholic with links to the Socialist Party and viewed trade unions
as legitimate counterparts at all levels. As he declared in a meeting with an
IUF delegation, he wanted strong unions in his company because he could
not imagine leading his company against its employees and without
respecting their rights. There is no doubt that this was his sincere belief.
Riboud was a man of honour.
The recent experiences of the IUF at that time, however, also played a role. It
became apparent to all TNCs in the IUF’s scope that it was becoming a
serious counterpart, including Danone. As we have seen, the IUF had
sustained a bruising conflict with Nestlé in 1973, although in the end it had
been resolved on union terms. In 1980, the IUF conducted a major conflict
with the Coca-Cola Company, in order to secure the survival of a union (and
indeed the physical survival of its officers and activists) at a bottling subsidiary
in Guatemala. An international campaign involving solidarity strikes at Coke
plants in several countries, demonstrations, and negative publicity, with wide-
spread support from NGOs and political groups, obliged the Coca-Cola
company to buy the subsidiary plant, recognise the enterprise union and
intervene such that the then government ceased is anti-union terror
campaign, at least in that plant.
This, however, was not the end of the story. Four years later, the directors
Coca-Cola had put in charge of the plant absconded with the cash and
declared the plant bankrupt. The workers, who had become aware that this
might happen, occupied the plant on February 18, 1984. The IUF again made
representations to the Coca Cola Company, and the company initially refused
to take responsibility, as in 1980.
The assumption by the company that the IUF would not be able to replicate its
campaign of 1980 proved unfounded. In fact, the 1984 campaign was even
stronger than the first one. It involved: unions which had previously stood
aside (notably in the US and in Canada); a union television crew from New
York who visited the occupied plant to document the occupation (3); a
professional accountant from the Interfaith Council for Corporate
Responsibility in the United States (4) who discovered how the directors had
cooked the books which they had left behind in their precipitated departure; more
solidarity strikes; waiters in the Philippines and supermarket cashiers in
Sweden refusing to serve or sell Coke, and more. The damage to the
company image was enormous.
After three months, the company wanted to settle. On May 27 company
representatives (the corporate HR director and regional directors) met with an
IUF delegation (the general secretary, the North American regional secretary,
the vice president of the principal North American affiliate and two officers of
the Guatemalan union) in Costa Rica. After two days of tense negotiations the
company agreed to sell the plant to a reputable buyer, guaranteed that the
new owners would recognise the union and the existing CBA, agreed to
employ and pay the workers occupying the plant until it reopened, and agreed
that the plant would reopen with all its workers and that no-one would be laid
off. On that basis, the IUF called off its boycott.
The implementation of the agreement took several more months. Coca-Cola
was looking for a buyer, the workers were still occupying the plant and the IUF
was standing by to resume the international solidarity action. Finally, on
November 9, the company announced that they had found a buyer: a
consortium led by Carlos Porras Gonzáles, a reputable economist who had
run businesses in El Salvador. New negotiations then had to be conducted
with the new owners, which were concluded on February 1, 1985, just over
two weeks short of the anniversary of the start of the occupation, and the
plant re-opened on March 1. The final settlement corresponded to the
agreement reached with Coca-Cola on May 27, 1984, although the plant
reopened with only 265 of the 350 workers who had been occupying it (the
others were re-hired in the following months). Since then, the Guatemalan
union has become the core of a national food workers’ federation and the
CBA has been regularly re-negotiated, although the plant now has other
owners.
The IUF has had many meetings with Coca-Cola top management since to
discuss problems arising in the Coca-Cola system, and also reached
agreements on specific issues, but without a formal framework.
When the IUF met with the Coca-Cola management representatives on May
25-27, 1984, at a time when the company was obviously ready to make
extensive concessions to put an end to the conflict, the question arose
whether the IUF delegation should demand the establishment of a general
IFA as part of the settlement. The IUF general secretary decided against it
because, with the lives of the workers in the plant still under threat (the
Guatemalan army had surrounded the plant since the beginning of the
occupation and was still there), it was his opinion that the IUF should not risk
delaying the settlement by introducing extraneous issues. The overriding
priority had to be to protect the Guatemalan affiliate and its members. The IFA
could wait.
The Nestlé conflict in 1973 and especially the conflicts with Coca-Cola in 1980
and 1984/5 had received extensive press coverage. The IUF had
demonstrated its capacity of creating serious inconveniences to even large
and powerful TNCs and it may be safely assumed that by 1984 at the latest
the IUF had caught the attention of all leading TNCs in its field of activity.
The Danone agreement was not reached in the context of any conflict with
Danone and all discussions and negotiations were conducted in a friendly
atmosphere of mutual respect and trust. It would be wrong to suggest that
Danone had become interested in concluding an IFA with the IUF because it
feared a conflict with the IUF: no serious conflict was on the horizon and,
given the Danone corporate philosophy, it was highly unlikely to arise. It can,
however, be said that Danone had perceived the IUF to be a serious
international counterpart and had come to the conclusion that signing an
agreement with the IUF was not only a moral and political imperative but also
a smart business move.
4. IFAs and Codes of Conduct
The distinction between Codes of Conduct and IFAs is sometimes ignored or
blurred. For example, a list of IFAs established by the Friedrich-Ebert-Stiftung,
in 2002, is called: “List of Codes of Conduct/Framework Agreements”, as if
they were interchangeable. A footnote says: “Some GUFs call the agreements
‘Framework Agreements’, not Code of Conduct, because there had been only
a few principles fixed in the first agreement which often have been extended
by additional agreements. For instance in the case of Danone the first
agreement of 1988 has meanwhile been developed by six other agreements.”
This is, of course, not true. Neither the IUF nor anyone else ever called the
Danone agreement a Code of Conduct, nor did anyone ever suggest that a
Code was in any sense stronger than a Framework Agreement. A similar list, by SASK, the Finnish trade union development agency, in 2005, is also headed “Codes of Conduct/Framework Agreements”, with a similar footnote.
A positive article about IFAs in the IMF journal Metal World (Nilsson, 2004)
introduces the subject by referring to IFAs “or Codes of Conduct, as they were
formerly called” and goes on to say that IFAs were called Codes of Conduct
“before that expression was compromised.” The article later correctly points
out some of the fundamental differences between Codes and IFAs, but the
fact is that IFAs were never called Codes and that the concept of Codes was
compromised from the beginning as a management-driven public relations
exercise.
The ICFTU and some GUFs have developed “model codes of conduct” as
potential stepping stones to IFAs or for lack of a better alternative. But some
analysts have pointed out with reason, that:
“With this voluntary initiative by management to implement social policy
rules as business principles, weak unions and workers’ representatives
will tend to have little say in taking this further to a framework
agreement that commits both management and unions. There is
reason to consider this a barrier to adopting global agreements that
commit both management and unions, and thus a hinder for trade
union recognition.” (Tørres and Gunnes, 2003: 45).
On the subject, these authors also note:
“Codes of conduct covering issues of social responsibility are
becoming more frequent. However, the extent to which this is
facilitating improved communications and dialogue between employees
and management is more doubtful. […] There is […] a danger that
codes are seen as something more than they really are, and used to
deflect criticism and reduce the demand for negotiations or external
regulation. […] In some cases, codes have led to a worsening of the
situation for those whom they purport to benefit.” (Tørres and Gunnes,
2003: 443).
Most trade unionists, analysts and researchers make a clear distinction
between IFAs and Codes of Conduct.
The ICFTU notes that “the content of a framework agreement is often similar
to the language found in some of the codes of conduct that companies have
adopted for their suppliers and which cover some, or all, of the fundamental
rights at work. However, that does not mean that a framework agreement is
the same thing as a code of conduct. It is not.
“There is a fundamental difference between a code of labour practice, which
is a unilateral management pledge, mainly made to address public concerns,
and a framework agreement, which is recognition that the company will
engage the relevant international trade union organization and discuss issues
of fundamental concerns to both parties.” (ICFTU, 2004)
Others have been even more explicit. Riisgaard notes that code of conduct
responses are frequently an example
“where businesses […] have embraced codes of conduct as protection
against public opinion and as a means to sidestep demands for
unionisation. The RUGMARK certification system for example
guarantees that no child workers have been used in the production of
the labelled blankets, but does nothing to secure the rights of the
remaining workforce […] A 1998 ILO investigation of 215 codes found
that only around 15 percent refer to freedom of association or the right
to collective bargaining, and likewise a 1999 OECD investigation
shows that only around 20 percent of the 182 investigated codes refer
explicitly to the ILO conventions on freedom of association and the
right to collective bargaining […] As seen in the examples above, one
can seriously question whether most voluntary initiatives reflect NGO
or business interests rather than workers’ interests. […] As a result, it is
important to differentiate between voluntary initiatives that are
negotiated with labour and initiatives that are not.” (Riisgaard, 2003: 2)
This author has pointed out elsewhere that in many cases, far from promoting
labour rights, one of the main purposes of Codes of Conduct has actually
been union avoidance:
“In 1990, 85 percent of the top 100 US corporations were found to have
a code; in the UK, this figure was 42 percent, in the Netherlands 22
percent.(5) However, most codes of conduct that address social issues
are limited in their coverage and do not address basic labour rights […]
This comes as no surprise since, in some cases, companies adopted
codes as part of a union-avoidance strategy by pre-emption, preferring
to unilaterally offer a paternalistic package than have a recognized
negotiating body to deal with. As the ICFTU has pointed out, ‘many of
the US-based companies that were the first to adopt codes were, in
both principle and practice, opposed to trade unions’. For example,
the Caterpillar code states that the company seeks to ‘operate the
business in such a way that employees don’t feel a need for
representation by unions or other third parties’ and the Sara Lee Knit
Products code states that the company ‘believes in a union-free
environment except where law and cultures require (SKP) to do
otherwise.’ The DuPont code reads: ’employees shall be encouraged
by lawful expression of management opinion to continue an existing
no-union status, but where employees have chosen to be represented
by a union, management shall deal with the union in good faith.’ (6)
A second problem has been monitoring of compliance. Most codes do
not provide for a credible independent monitoring procedure, or for
strong enforcement and complaints mechanisms. Unions have argued
that the existence of independent trade unions throughout the
operations of transnational corporations are the most efficient
monitoring system (7). Many companies have gone to great length – and
expense – to resort to other monitoring systems (creating their own,
contracting out to commercial monitoring enterprises or to compliant
NGOs) with dubious results.” (Gallin, 2000)
After a detailed analysis of the differences between IFAs and Corporate
Social Responsibility (CSR) initiatives, most commonly expressed in the form
of Codes of Conduct, Gibb observed:
“When considering the argument that IFAs are no different than other
CSR initiatives, or that IFAs are one form of CSR, it must be
recognized that if the contribution of IFAs was limited to improving the
public image or providing a marketing boost to companies, there would
be as many IFAs signed as there are CSR initiatives. This is not the
case.” (Gibb, 2005)
In a document for the IUF Executive Committee meeting in 2006, the IUF
secretariat makes the same point:
“Whilst some may say that IFAs are little more than agreed ‘codes of
conduct’ they are clearly significantly better. Unlike codes their very
existence as signed agreements means they are explicitly built on
union recognition at international level and therefore do not pose the
danger of being used as an alternative to unions in the same way that
many codes and CSR initiatives do (even those where unions
somehow ‘sign on’).” (IUF, 2006)
Although the one obvious difference between Codes and IFAs is that most
Codes are unilateral company statements whereas IFAs are negotiated
labour/management agreements, it is not the only difference and actually not
always the case: there are some negotiated Codes. There may be a deeper
underlying issue, which has to do with the view unions take of the purpose of
such agreements. If IFAs are primarily meant to address company behaviour,
they may indeed appear to be no more than a stronger kind of Code: stronger,
because the outcome of a negotiation, but not basically different in purpose.
If, on the other hand, IFAs are seen and used as organizing tools, the contrast
with Codes becomes much clearer. (Egels-Zandén and Hyllman, 2007)
5. IFAs and European Works Councils
As a rule, European Works Councils (EWCs) do not negotiate IFAs and are
not signatories to IFAs.
Carley (2001) observes that:
“In formal terms, the prospects of EWCs developing a negotiating role
are not very bright. The (EU) Directive provides for no such role for
them, stating that their purpose is to improve information and
consultation and laying down only an informative/consultative role for
statutory EWCs based on its subsidiary requirements.”
The European Trade Union Confederation (ETUC), whilst it supports the
development of a European framework for transnational collective bargaining,
which should complement the existing framework for European “social
dialogue” (5), stresses that EWCs do not have a mandate for negotiations nor
the right to sign transnational agreements:
“The power to do this must remain solely and strictly a trade union
right, owing to their representativeness long recognized by the
Commission, which also specified as much in a text. Transnational
agreements as such must be left up to collectively responsible and thus
players with a mandate to represent their members. […] EWCs, which
we stress were only given powers of information and consultation, are
not appropriate bodies for negotiations given the current state of
legislation.” (ETUC, 2005)
Therefore, unsurprisingly: “The first and arguably the clearest conclusion is
that from the available evidence, the practice of negotiating joint texts in
EWCs is extremely rare. The research has found only 22 examples in nine
multinationals. Given that there are probably 700 EWCs in existence, this
represents only a tiny proportion of the total (little over 1 percent).” (Carley,
2001: 47)
The existence of joint texts in EWCs is even more rare than Carley suggests,
since he included six Danone agreements in that number, although, as we
have seen, these were neither negotiated nor signed by an EWC but in an
entirely different context and, indeed, even before the existence of the EU
directive.
This does not stop Carley from claiming that the joint IUF/Danone committee
which met annually from 1987 onward was “one of the first EWCs”:
“BSN/Danone thus established an EWC long before all but one or two other
firms had done so – and long before the EWC directive was proposed – and
this body (and IUF) was given a negotiating role almost a decade before any
other EWC.” (Carley, 2001: 34).
In fact, the IUF/Danone committee was not an EWC at all, since neither the
IUF nor the company could possibly foreseen the future creation of a body
that did not exist at that time. Furthermore, although – as Carley rightly points
out- the joint IUF/Danone committee was subsequently “formalized” by an
Article 13 agreement in March 1996, this joint committee has none of the
typical limitations of the EWCs (in the sense that it is vested with negotiating
powers, and is worldwide in scope). This is so precisely because it did not
originate as an EWC and therefore does not conform to the standard EWC
pattern.
One wonders which of the remaining sixteen “joint texts” have been similarly
retroactively annexed to an agenda of bolstering an assumed EWC
negotiating role. The ENI agreement (2002), for one, is also one signed by the
GUF and not by the EWC.
From the point of view of an international labour strategy, three issues need to
be addressed and solved in a way consistent with trade union interests,
namely, the negotiation issue; the trade union issue; and the geographical
issue (Gallin, 2003).
First, some EWC agreements (EFAs) explicitly rule out any negotiating role,
others make provisions for certain types of negotiations. The important point
here is that the content of what happens in an EWC depends on a mutual
agreement of the social counterparts and not necessarily by what the
Directive says. Unions should therefore push for what is consistent with their
objectives and their interests, rather than voluntarily conforming to rules
invented by others that work to their disadvantage.
Second, the trade union issue arises because the EWC directive is a much-
diluted version of the original draft of 1980, which would have given trade
unions statutory representation rights. In its final and present form, it does not
mention trade unions at all, so that unions have had to fight to nail down the
right of their officials to be part of the EWC and to ensure that the lay
members themselves be union members. Where this has not succeeded,
EWCs remain vulnerable to management manipulation or become outright
management tools.
The main reason why the trade union presence, and specifically international
trade union presence, is necessary, is because it represents the long term
general interest of workers, whereas works council representatives are not
necessarily committed to defending more than the specific interests of the
workers of their enterprise as those interests appear to them at the time of the
meeting. When each delegation comes to the meeting determined to defend
its short-term interests, this can easily lead to a free-for-all where
management can impose its own decisions. Whenever workers’
representatives meet internationally, it is their obligation to reach a position
reflecting the long-term general interest of all involved and, in order to do so,
to negotiate the necessary compromises among themselves. Once this is
done, they can confront management with a united position. Any other
scenario is a recipe for defeat.
Drawing the lessons of the Renault-Vilvoorde conflict (other examples could
also apply), Rehfeldt (1999) observes:
“The EWC alone will always have great difficulties when it tries to
define common interests of the workforce in different European plants
and in different economic situations. Union intervention will always be
necessary in order to facilitate a compromise between different
interests and different strategic approaches. Neither the ETUC, nor the
European industry federations have yet been able to play this role of
interest intermediation and arbitration.” (Rehfeldt, 1999: 113)
Finally, the geographical issue arises because the directive formally only
applies to EU countries, but leaves agreement on the actual coverage of the
council to the social counterparts. Most companies seek to limit the EWCs to
the EU only (the issue here is not so much Norway and Switzerland but
Eastern Europe). The union interest is of course to secure the maximum
coverage, ideally of every single operation of the company regardless of its
location anywhere in the world. Thus most EWCs are confined to the EU,
some cover all of geographical Europe and at least three are worldwide in
scope.
Since the social counterparts are largely free to make their own arrangements
when establishing an EWC, there is no reason why unions should obediently
restrict themselves to the letter of the Directive. In the end, the structure and
functions of an EWC boil down to a question of the existing balance of power,
which, as we have seen, applies to any negotiating situation. Admittedly,
given the present balance of social and political power in the EU member
States and in the Commission, it is unlikely that much progress can be
achieved at this time through a revision of the EWC directive.
Because the EWC represent, at least temporarily, a dead end, some GUFs,
such as the IMF, have revived the World Councils. UNI, for its part has
created a number of international union networks at TNC level, which appear
to be in fact world councils in a more flexible form.
Conclusion: Back to the Future?
As we noted above, the significance and value of an IFA very much depend
on the purpose it is intended to serve, which, in turn, is confirmed (or not) by
its results.
The broader issue is to what extent IFAs can still be considered to be the
elements of an emerging architecture of international labour/management
relations in a global political context that is increasingly hostile to trade union
rights. In such a context, there is a danger that TNCs will be increasingly
tempted to ignore “social partnership” arrangements, whilst the options for
unions are narrowing down to their “core business”: rebuilding power relations
through struggle.
The situation of the labour movement is that it is confronted not only with the
hostility of anti-union corporations and conservative governments here and
there, but also with a worldwide political and social project, driven by
transnational capital, which is fundamentally anti-democratic. It is about power
in society.
This system of power is codified and given enforcement authority by the
World Trade Organisation (WTO) and reinforced through the international
financial institutions, which are also instruments of corporate policy. It is about
a new hierarchy of rights in which corporate rights outweigh all others at the
level of enforcement, in a world where other international institutions, such as
the ILO, or Conventions on human rights, have little or no enforcement
capacity.
In this world, the objective of any meaningful international labour strategy can
only be to challenge and reverse the existing hierarchy of rights by changing
the existing power relationships through organisation.
In this context, the role of IFAs has to be reassessed. In order to become a
useful part of a global labour strategy, IFAs must be primarily understood and
used as global organizing tools that can be evaluated by measurable
outcomes. Where rights such as freedom of association and the right to
collective bargaining are affirmed, IFAs should contain provisions ensuring
that such rights are actually exercised.
IFAs must confront the employment-destroying nature of the system as a
whole, which is not the same thing as fighting individual plant closures. In
negotiating IFAs, the priority should be to put a stop to outsourcing and
casualisation, which are now rampant throughout the manufacturing and
services industries. Unions must claim the right to challenge management
policies and decisions when these are damaging to labour interests and to the
general interests of society. In other words, IFAs can and should become
instruments of industrial democracy.
We know that very few companies would today be prepared to sign on to such
a program. That is no reason to scale down our level of ambition and to refuse
to develop adequate responses to the crisis we are facing. In conclusion, we
cannot do better than quote from a speech of the IUF communications
director addressing the same issues last year:
“We need to develop a political response to the corporate program, and
we need to link this program to our members’ day-to-day struggles in
ways which can effectively challenge the enormous shift in the balance
of power which is what globalisation is fundamentally about. While the
challenge is enormous, we must never forget that the historic gains of
the labour movement – gains which profoundly transformed the world
we live in – seemed scarcely realizable when we first began to fight for
them. We fought and we won. There was nothing inevitable about the
corporate advances of the last two decades. We were simply out-
organized at all levels, or failed to organize because we didn’t
appreciate the significance of what was taking place.” (Rossman, 2003)
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(1) The exceptions are the labour movement in the United States and Canada, and in the United Kingdom and Ireland, where some unions hold membership and collective bargaining rights in both countries.
(2) As seen by the author himself who was at that time the general secretary of the IUF.
(3) The film is called “The Real Thing”. It was shown at hundreds of solidarity meetings in many
countries.
(4) Paul Abrecht of the Interfaith Center on Corporate Responsibility (ICCR), New York. His report is available in the IUF archives.
(5) Kaptein, S. P. and Klamer, H. K. (1991). Ethische Bedrijfscodes in Nederlandse Bedrijven,
Nederlands Christelijk Werkgeversbond, The Hague, quoted in van Liemt G. (1999), “Codes of
Conduct and International Subcontracting: A “Private” Road towards Ensuring Minimum Labour
Standards in Export Industries, paper presented at the conference on Multinational Enterprises and the Social Challenges of the 21st Century”, Leuven, May 3-4.
(6) Caterpillar: Code of Worldwide Business Conduct; Sara Lee Knit Products: International Operating Principles; DuPont: Labour Relations Policies and Principles; quoted in ILO document GB.273/WP/SDL/1 (Add. 1): “Overview of global developments and Office activities concerning codes of conduct, social labeling and other private sector initiatives addressing labour issues”, (Annex, endnotes 69 and 70), November 1998
(7) “The experience is that independent and secure trade unions are the most effective means of ending or of preventing the exploitation and abuse of workers. Codes of conduct are not as efficient as what workers can do for themselves when they are allowed to join free trade unions and to bargain collectively with their employer in the knowledge that their rights are secure and protected. The objectives of codes are best achieved when governments respect the trade union rights of workers. Self-promulgated codes that do not mention trade union rights give the impression that it is possible to protect workers’ interests without respecting their right to organize into independent trade unions. This impression is reinforced where codes merely pledge the company to respect national laws and practice.” (ICFTU (1997), p. 2). Also:
[…] “Independent monitoring by itself … is not sufficient to ensure respect for minimal worker rights and occupational and environmental health and safety standards. No independent monitor can substitute for the independent organization of workers through their trade unions, which must be represented on the monitoring bodies for these to meaningfully do their job.” (Ron Oswald, IUF General Secretary, in a letter to the International Herald Tribune, June 9, 1998)
(8) A note on terminology is in order. About twenty years ago, a new vocabulary was introduced in the public discourse on industrial relations, typically involving concepts like “social partners” and “social partnership”, or “social dialogue”. This vocabulary seems to have originated with the EU Treaty of Rome (1984), but has since, unfortunately, been adopted by the ILO and by most international trade union organisations. In fact, it is not designed to reflect reality but to hide it. “Partnership”, by any definition, assumes shared interests. In recent years. it has become increasingly obvious that whatever shared interests may have existed or still exist between workers and employers, they are overridden by conflicts of opposing interests in most areas of industrial relations. Today, trade unions do not have
“social partners” in any real sense: the accurate term would be: “social counterparts”. As for “social dialogue”, it is a particularly vague and meaningless term, obviously designed to dilute the reality of labour/management relations, perhaps to sidestep terms like “negotiation”. Since vocabulary is never innocent, it is worth reflecting on what interest is served by introducing this kind of language.