Trade Promotion Authority (TPA), the new name of Fast Track Authority, is President Bush’s first legislative trade priority. TPA is a critical part of the President’s ability to negotiate good trade deals that will open markets, increase choices and lower costs for American farmers, workers, consumers, and business.

The President was granted fast-track authority almost continuously from 1974 to 1994, but the authority lapsed and has not been renewed. Legislation to renew the President’s fast-track authority was defeated in 1998. The major issue was then, as is now, the role of labour and the environment as objectives in trade agreements.

How far the holding of TPA for labour and environment conditionality is justified? If one could quantify the losses and gains, the US had made owing to non-availability of fast-track authority during these years and persisting with linking trade with labour & environment, the loss would definitely outweigh the gains if any. Already, US exporters and businessmen are showing their deep concerns.

US exporters are losing business in Chile to Canadian firms because Canada has negotiated a free trade agreement with Chile and the US has not. This is just one example. There are over 130 preferential trade agreement in the world today, and the US is a party to only two. Free trade is good for American workers, farmers, consumers and businesses. About 12 million US jobs depend on exports. 25 percent of gross farm income comes from exports.

It is not only the US economy but the entire world would have gained. Tremors in the US economy are felt worldwide. It is the largest exporter and importer in the world, constituting 17% and 24% of world exports and imports respectively.

The protagonists in the US really need to do a serious introspection of its policies of the past few years. As far as linking trade with labour is concerned, there is neither theoretical literature nor empirical evidence to prove that it ensures better compliance of core labour standards.

Pradeep S Mehta, Editor

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Global Programme on Linkages

Trade and Labour Standards: The Current State of Debate

After the Seattle debacle, many people in the North and the South felt that the notion of linking trade and labour standards would disappear from the agenda. However, for those who oppose this linkage, complacency is not warranted. The issue is still very much alive. In the US it is one of the major stumbling blocks in the way of President’s Trade Promotion Authority. In case of European Union countries, consensus also seems to be lacking, though the EU’s official stand is not to link trade with core labour standards.

The findings of the field study, undertaken by CUTS-CITEE demonstrated that Northern NGOs still tend to support a ‘social clause’ in the WTO and other trade agreements, believing that it can exert pressure on governments with positive results for workers. The picture for Southern NGOs is more varied. Trade Unions, especially in countries in which the government exerts an influence over organised labour, are in favour of linkages. Indian unions, on the other hand, remain determinedly against.

The deadlock at the WTO has prompted a search for other ways to address workers’ rights. These include the use of fines rather than trade sanctions for dispute settlement; strengthening the role of the ILO in setting and monitoring standards and providing a forum for debate; voluntary instruments, designed and monitored by firms themselves or by independent bodies; and extending the reach of mandatory national standards.

The future of the trade-labour standards linkage depends both on the domestic political situation in the US and also on the ability of those actively involved in the debate to find an innovative solution that will improve workers’ conditions without the risk of protectionism.

The full report is available online at http://www.cuts-international.org/linkages-interviews.htm

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News Roundup

US Proposed Bill to Ban Imports Hits Myanmar

Proposed US legislation to ban all imports from Myanmar is damaging the country’s booming garment industry. US lawmakers proposed the measure to discourage alleged forced labour and other human-rights abuses in Myanmar, previously called Burma, though critics see it as protectionist and contrary to WTO rules.

International garment buyers began ordering from alternative sources in Asia, including Cambodia and Vietnam, immediately following the bipartisan “Burma Freedom Act,” which was introduced in the US Senate in May and the House of Representatives in June.

While Myanmar-made garments account for a tiny percentage of the US’s overall garment imports, a downturn in trade would result in a substantial blow to Myanmar’s economy, where the garment industry is the second-largest employer, after the government.

Low Wages need not Reflect Competitive Advantage

“Low wages are not always a sign of competitive advantage. Even high wages can be a sign of comparative advantage provided that productivity is high,” said A. S. Oberoi, director, ILO (South Asia multi-disciplinary adviser team).

While some enterprises feel that they can achieve global competitiveness by keeping wages low, that is not necessarily true, he added. The ability of a country to attract foreign direct investment (FDI), new technologies and establishment of production bases by international enterprises will depend on its capacity to offer high quality skilled human resources in new technology sectors, said Mr. Oberoi.

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Even Multinationals Employ Girl Children for a Profit

As many as 48,000 girl children have been employed in the hybrid cottonseed farms managed by multinational companies in Andhra Pradesh, India. The offending companies include Novartis, Hindustan Lever, Advanta, Proagro and Mahyco-Monsanto.

In hybrid cottonseed production, girl child labour constitutes 85-90 percent of the total workforce engaged. They are mostly employed for emasculation and pollination work, which is the most important activity in seed production. The local seed producers who have agreements with large-scale national and multinational seed companies employ girl children on a long-term contract basis through advances and loans to their parents.

In order to extract more work from children, employers are offering incentives like giving chocolates, biscuits or snacks. Competitions for fast work are being conducted with the prize being a ribbon or bindi. Twice a month, children are taken for movies in a nearby town. To get even more work at the end of the day, the employers might show a video and get the girls to work while watching, for example separating cotton kappas from capsules.

Russia may Face Export Ban on Caspian Caviar

Russia risked the imposition of a total ban on Caspian caviar exports when it refused to attend a key meeting of regional states in July at which measures were to be agreed to save the endangered Caspian sturgeon from extinction.

European officials expressed deep anger at the Russian snub and said that Moscow’s actions could lead to a complete ban on all caviar exports from the Caspian region next year. More than 80 percent of the world’s caviar is produced by the various species of Caspian sturgeon, some of which are in danger of extinction from overfishing and poaching.

Moscow’s move came just one week after the body charged with regulating caviar exports – the Convention on International Trade in Endangered Species (CITES) – decided in Paris to reinstate export quotas requested by the Caspian countries for this year.

US Faces Uphill Battle on Tough OECD Rules on Export Credit Loans

The US is pushing to continue discussion in the OECD on the need for strong environmental rules that export credit agencies (ECAs) would follow as they make decisions on loan guarantees, even as most other OECD members have signaled repeatedly that they will only support rules that recommend export credit agencies take certain steps. OECD members are facing a December 31 deadline for reaching agreement on the rules, which the US has rejected in their current form because they would only urge export credit agencies to adhere to certain environmental standards.

Of the 28 OECD members involved in the negotiations, only the US officially has not signed on to the agreement. With the exception of the US, informed sources said there appears to be consensus among the group’s members that the current draft proposal is acceptable. The remaining two OECD members – Slovakia and Iceland – are not taking part; Slovakia because it has only recently joined the group and Iceland because it does not have an export credit organisation.

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Event Report

Globalisation: Where Do We Stand?

On 27^th June 2001 CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE), organised a panel discussion on the subject: “Globalisation Where Do We Stand?” at New Delhi, India. It was the fifth in the series of quarterly New Delhi Working Group Meetings organised to discuss current issues pertaining to international trade and economic policy.

The meeting was organised in the context of the hue and cry about the ill effects of globalisation on various sectors of the economy. The discussion addressed the role of globalisation in India's economic development. It examined the myths and realities which are floating around this issue. The meeting also focused on issues and strategies that could possibly help India to meet its goals and priorities.

For more information: www.cuts-international.org/psm-member.htm

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Emerging Issues and Viewpoints

ILO Leads Discussion on Trade and Labour

On 19^th June, after seven years of indecision, the ILO agreed to take the lead in multilateral discussions on the social dimension of globalisation which some believe may take the pressure off from the WTO on the issue of trade and labour.

The ILO’s existing Working Party on the Social Dimension of Globalisation – which includes representatives from government, employer groups, and labour unions – has agreed to boost its mandate, commissioning the ILO’s Director-General Juan Somavia to prepare an authoritative and comprehensive report on “the social dimension of globalisation particularly the interaction between the global economy and the world of work”.

For more information: http://www.ilo.org/public/english/standards/relm/gb/docs/gb281/index.htm

New Study Highlights Use of Child Soldiers

More than half a million children are recruited into government forces and armed groups in more than 87 countries, the Coalition to Stop the Use of Child Soldiers revealed in a new global survey. At least 300,000 of these children are actively fighting in 41 countries.

The 450-page survey, “Global Report on Child Soldiers 2001”, is the most comprehensive study to date on the use of child soldiers. The report provides new details on military recruitment by government armed forces, civil militia, paramilitaries, and non-state armed groups in 180 countries.

The report finds that overall the situation has improved in Latin America, the Balkans, and the Middle East in recent years, while new generations of children are at risk in Africa and parts of Asia and the Pacific.

The report is available online at

http://www.child-soldiers.org/report2001/global_report_contents.html

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EC Adopts Strategy to Promote Core Labour Standards

The European Commission on 18 July adopted a communication proposing an EU strategy to promote core labour standards and social governance globally. The communication proposes action at European and at international levels to support the effective application of core labour standards for social development.

The strategy confirms the central role of the ILO. The Communication supports a better balance of the global governance system, through strengthening and effective use of ILO instruments and fostering joint work by international organisations. The Communication also proposes to create a high-level international dialogue, with the participation of international organisations – the ILO and the WTO, as well as development organisations such as UNCTAD, the World Bank and the UNDP.

The Commission also recognises the importance of private voluntary initiatives. Such initiatives reflect the corporate social responsibility of companies and their increasingly important role in supporting social development.

For more information: http://www.europa.eu.int/comm/trade/miti/devel/cls.htm

Announcement

Symposium on Linkages: Can We Bridge the Gap?

The CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE), Jaipur, India in association with the Brookings Institution, Washington DC, USA will be organising a one-day symposium on “Linkages: Can We Bridge the Gap?” in Washington on 19^th October 2001. One similar event will also be organised at London on 10^th October 2001. This is a part of our international campaign on linkages between trade and non-trade issues.

More information would be made available shortly on our website: www.cuts-international.org

About ‘The CUTS-CITEE Linkages Update’

This is a strictly non-commercial and educational service for non-profit organisations and individuals. For subscription please write to:

CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE)

D-217, Bhaskar Marg, Bani Park, Jaipur 302016, India.

Ph: 91.141.2282821, Fax: 91.141.2207486/2203998

E-mail: cutsjpr@sancharnet.in / citee@sancharnet.in

CONTACT US

CUTS Centre For International Trade, Economics & Environment (CITEE)

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