Examination of witnesses (Questions 420
- 436)
TUESDAY 23 MAY
THE RT
HON CLARE
SHORT and MR
JOHN ROBERTS
420. But that is voluntary.
(Mr Roberts) That is voluntary, yes.
421. In some areas of the world that has been
undermined greatly by some of the free trade zones that have been
set up. The TRIMs Agreement could actually do as much damage as
some of those free trade zones have done to undermine local purchasing
and local content.
(Clare Short) I do not know. That has been alleged.
It would be very interesting to look at it case by case. This
has been agreed as part of the Implementation Agreement, country
by country they will look at TRIMs and give countries extensions.
If we get the new Round and it is at fault it can be brought back
to the table and we can negotiate a change. What is in the agreement
is designed to get industrialised countries, not developing countries,
that is the origin of it, using this local sourcing as a kind
of protectionist measure, as I understand it, in chemicals and
cars particularly.
422. The other example we have been given has
been Columbia. Columbia is one of the countries that is concerned
about the impact of TRIMs on food processing, the food processing
industry there, which is dominated by foreign multinational corporations,
almost to ensure that a minimum use of local agricultural products
is still allowed and if that is not allowed could the restrictions
on local content policy have potentially damaging consequences
for poverty reduction? Obviously the connection between the two
is quite apparent.
(Clare Short) I find it extraordinary just from first
principles to think that a multinational food processor would
set up in a developing country and import the raw product from
elsewhere, it seems like the opposite of economies of scale. Columbia
has this enormously competent Ambassador to Geneva who is one
of the inspirers of the Legal Advisory Centre, so I am very interested
in what he has to say. As I say, there has been agreement as part
of the General Council agreement on implementation to look at
TRIMs and the difficulties countries have country by country and
then, if there is a genuine problem in the agreement that is reached
under Uruguay, if developing countries think that, they can take
it back to the table in the next Round.
423. Is this an issue that DFID has been looking
at in terms of bilateral negotiations with these countries?
(Clare Short) No, it is not an issue that has been
particularly raised with us. We are open to anything but it is
not an issue that has been brought to us by the developing countries
that we have been working with as a major problem. You have just
given me two interesting cases that I have not heard about before.
I remember in Birmingham when we built the International Convention
Centre we had a commitment to local labour. It was all in my constituency
so I was rather attached to this. In the end it broke down on
just the practicalities of finding out where everybody lived.
My own sense is that countries and people tend to have a deep
attachment to this and practicalities often need to change. That
is my instinct but if there are individual cases we would be very
interested to hear about them. There are processes now agreed
where these could be reviewed.
Chairman: Secretary of State, there are
also problems with the workforce in relation to this. We understand
that South Africa has got laws, presumably because they want to
do positive discrimination, which require foreign investors to
employ a certain proportion of the workforce from a particular
ethnic or other group. We are really asking whether you would
support South Africa maintaining such laws
Tess Kingham
424. Or Rwanda.
(Clare Short) I am very strongly in favour of equal
opportunities policies and employing local labour from the local
community is a very important principle in that. We have it in
our country and it is to be encouraged all over the world I think.
Does the existing agreement clash in any way with that?
(Mr Roberts) No.
(Clare Short) I did not think so.
Chairman
425. Alec Erwin made another very interesting
remark concerned with using labour laws in the trade agreements,
which was one of the issues the NGOs and the trade union movements
in Seattle were trying to do, as you have told us. Alec Erwin
said that there had to be greater harmonisation between the ILO
Conventions and the WTO system. Would you agree with this assessment?
(Clare Short) My view is that those who want to use
the WTO to enforce core labour standards are taking the wrong
route. Inevitably it leads to punishing countries for their poverty.
426. Yes.
(Clare Short) Where is child labour? It is in the
poorest countries. 95 per cent of it is not in traded sectors.
Those are the kinds of issues that quite reasonably people feel
emotional about but they reflect poverty and they need to be remedied
and children need to be in schools and their parents' incomes
need to be increased. Taking a trade sanction against that country
is not the right route to make progress. This was one of the causes
of the Seattle breakdown. It is felt very strongly by developing
countries that this is pure protectionism. There is this strong
feeling in the American trade union movement that with all the
technological change that has taken place—and of course
the economy is booming but there is a lot of technological change
because we are living in such an era—all the change is capital
exiting from the US and going to countries where labour is cheaper.
There are lots of people who really believe that to be the case.
All the analysis says that it is not the case. Therefore, they
are trying to say "you have got to have competition by having
cheaper labour". Well, it is one of the comparative advantages
of developing countries. It is intolerable that there will be
a minimum wage in the world and capital will not move to your
country unless you are paying as much an hour as is paid in the
US, which is the logic of that position. There are lots of people
who genuinely feel emotionally about this but it is the wrong
route, WTO is the wrong instrument. What we need is a more effective
implementation of ILO agreements. There has been progress in the
ILO recently. This is a UN body with representatives of trade
union, government and business from every country, so it is a
very suitable body, bringing together all the appropriate interests.
They have recently agreed this set of core labour standards to
simplify it because they have got lots and lots of different conventions
and different numbers of countries have signed up to different
numbers of conventions. To get round to the core labour standards,
which are child or bonded labour, the right to organise, which
is not just trade unions but including community organisations,
people have a right to organise themselves, and no discrimination.
That is right, is it not? They have made those the core and said
that the ILO will report on progress in every country year on
year against these core labour standards. They have instruments,
like the IPEC Programme, to work on reducing child labour. We
have put some money into that. They are doing some collaborative
projects in Andhra Pradesh, in Tanzania and on child sex workers
between Thailand and Bermuda, what do you call that triangle,
the Mekong. We strongly, strongly believe that we should do all
in our power to drive forward core labour standards and particularly
child labour we should make progress on otherwise it is a life
sentence for the child. Not only do they not have a childhood,
they do not get any education and therefore they are poor and
in turn their children will be poor. I passionately do not believe
the WTO is the right instrument to enforce that. I think we have
made some progress. This was very hard in the run-up to Seattle,
even in the EU there were major forces going with the WTO enforcement
system. As you know, the United States went with it and President
Clinton came to Seattle and said it and that was all part of the
atmospherics that really soured Seattle. I understand that since
then the ILO has put together a working group drawing in the World
Bank. We think that all the development agencies should get together
with the ILO to look at how we can drive forward the implementation
of core labour standards across the world. I think the ILO has
started that process. It is now under new leadership. I think
there is a hope of getting more vigour and more progress.
427. They should be separate, WTO and ILO, pursuing
their objectives but they should not actually join?
(Clare Short) It is the enforcement. The WTO has an
enforcement mechanism, that is why everybody wants it, the environmentalists,
and everybody wants to get inside the WTO. The enforcement mechanisms
are sanctions against the trade of a country.
428. Yes, and that you do not agree with.
(Clare Short) If you just look at where child labour
is in the world, most of it is not traded, but you would end up
with sanctions against the poor countries, that is the pure logic,
you would punish countries with trade sanctions for the fact that
they are poor. The alternative must not be no action, no progress.
We must not go down that road. It is wrong and it would bring
the WTO into disrepute.
Tess Kingham
429. I can see the argument about the WTO but
the other criticism of the ILO is that there is not an enforcement
mechanism, that it is done in a sense on the goodwill of companies
or multinationals to accept the standards within their working
practices within individual countries. We have also heard in evidence
from the Committee before that companies have said that consumer
power is very important in putting pressure directly on countries
and the Ethical Trade Initiative has been part of that. Do you
not see any role at all for enforcement within any of those structures?
Do you think there is a place for enforcement which is not within
the WTO?
(Clare Short) Yes. As I have just said, the ILO needs
to do more effective work on enforcement. It is meant to draw
up conventions and then countries are meant to incorporate them
in their law and then they are meant to enforce them. Many countries
have laws against child labour and against bonded labour, I think
India does, but there is lots of child labour and an awful lot
of bonded labour. The ILO is a UN body, it is not multinational
capital, it is a UN body, and the Member States that are represented
take delegations that represent their government, their trade
unions and their business community. It is unfair to describe
it as just belonging to multinational capital.
430. I did not do that.
(Clare Short) No, but you said that is what the criticism
is.
431. No. Can I separate that out, the focus
is on multinational companies like Nike or some of the ones that
there have been consumer activities against operating in certain
countries with poor labour standards.
(Clare Short) Yes, I am coming on to that. We must
improve the effectiveness of the ILO and there is this work going
on on poor labour standards. There is a programme—what does
SIPEC stand for—dealing with child labour. The US have just
put a lot of money into it. It needs to be more effective on the
ground and some of the ILO's programmes have not been. We need
a big reform effort there. I agree with you, we have a general
problem in the world system that lots of countries have signed
up to ILO conventions, incorporated them in their law, and there
is no enforcement; India being a case in point. Then the question
for multinational companies, I think people imagine them opening
factories in Bangladesh because what they do is source locally.
They might well give cloth and patterns to a local Bangladeshi
employer who then employs the local staff and so on. That is how
it works rather than them opening up their own company. So you
get local labour practices. In a country where child labour is
widespread then you will get those local employers engaging child
labour. Then the multinational company will find itself on the
front page, never having directly employed child labour but sourcing
goods from someone who does. The consumer power has been very,
very important here. Multinational companies are more and more
investing their label, their reputation is fantastically important
to them in a business sense not just in a sort of concerned social
sense, and they are very, very keen to avoid these kinds of scandals
that can be so damaging to them. More and more of them are signing
up to ethical codes. All of these British retailers have joined
the Ethical Trading Initiative and that is trying to clean up
supply chains and generally raise standards but not have boycotts.
As I say, the man from Delmonte comes and says "Do not tell
me it is cheap, tell me there is no child labour here". The
power of that, if we can get it right is very important indeed,
or the man from Tesco or wherever. Those movements are having
a lot of effect. Then you hit this real problem about the boycott
and lots of really concerned good people who say children have
been employed in Bangladesh in the making of shirts or t-shirts
they might buy, they call for a boycott but we have the experience
in Bangladesh. Senator Hartness just tried to bring in a bill
that said America should not allow any imported textiles from
Bangladesh if there were any children employed in producing it.
It actually probably never had any chance of being law, like our
Ten Minute Rule Bill, but it led to lots of children being thrown
out of their jobs in Bangladesh. A study was done and lots of
them ended up as sex workers and beggars. You have got to act
but you have to act in a way that protects the interests of vulnerable
and poor people. It is the same with Cellcots in Pakistan which
makes 90 per cent of footballs in the world. It is outsourced
to people's homes. The poorest of the world tend to be widows
and women whose men folk have abandoned the family. Of course
they can sew those footballs at home and the woman might have
small children. It was revealed at the time of the last World
Cup that this was where all the footballs were coming from. The
danger is everyone does a boycott and finds another supplier and
some of the poorest people in the world are thrown out of all
employment. Actually it would have been easy to just stick with
a factory and then the women with children would not be able to
come. We have been working with Save the Children, I think it
is, to have a phased programme, getting those children into school
and increasing the income level of their parents. That is what
we need. The emotions are so powerful, quite reasonably, that
the call for a boycott is very reasonably understood but it can
lead to damage, like the Bangladesh case, and then it can be misused
by protectionist forces.
432. I accept that totally on companies where
there is a brand where there can be some kind of consumer power.
I think the concern about some of those issues, like the TRIMs
issues that we have touched on here, have been for some of the
companies where there is not a public face to the company. Without
any enforcement process, whether WTO or ILO or whatever, there
is no consumer power to actually nudge those companies into that
activity and then there are millions of people hidden in a sense
behind the scenes working in some countries with absolutely no
protection at all. What levers do we have to pressurise those
kinds of employers?
(Clare Short) You are absolutely right and all the
studies show there is room for improvement but the employment
standards for goods sourced by multinational companies tend to
be better on average than local employment standards in the poorest
countries for the reasons we have been discussing. It does not
mean we should not get improvement. If you read about the Bangladeshi
children that make bedding, that is a child, and it is a massive
production for local youth and lots and lots of children work
very, very long hours and certainly are not in school as a consequence.
I think they are sacked when they get a bit older and are not
cheaper. You are right, this cannot be our only enforcement mechanism
but it should be the local government that is the enforcement
mechanism adopting the codes of the ILO that they sign up to when
they go to those meetings in Geneva. It is part of the development
job to help countries create the conditions where they can do
so. There was a proposal from the ILO to have phased programmes
for the removal of child labour and so on. I repeat 95 per cent
of child labour is in non-traded sectors. It is in agriculture,
local mining, rock breaking, you know all those horrible jobs
that you see. We have to engage for real with where the real children
are and it becomes a development job. The ILO should do all the
reinforcement, but even rule making does not get those children
breaking rocks. Nobody is paying them any wages and we have to
get into development and have programmes in countries to really
phase out child labour but it has got to include increasing the
income level of those families. Those children work because otherwise
the family will not have enough to eat.
Chairman
433. It is a poverty question, is it not?
(Clare Short) Absolutely.
434. It comes out of poverty.
(Clare Short) We can strengthen the ILO's capacity
here. We are working with them now in Andhra Pradesh, Tanzania,
Mekong, to try and learn how to do this better and get them as
an institution to be able to both do advice on codes but helping
countries enforce and lift up the poorest so they are not in those
conditions. Bonded labour is another one. Bonded labour, I have
met bonded labourers, their father was sick when they were children
and therefore the whole family was sold into bonded labour. They
all have been working for nothing ever since. In this day and
age this is going on. It is a form of slavery and it is rife in
Nepal and Beehar.
435. Yes, it is, and we should not hide from
it. It should not be used in trade as a measure to sanction a
country.
(Clare Short) That ends up punishing poor countries
for being poor and that we must not do.
436. Secretary of State, thank you very much
indeed for bringing us up to date and discussing these very complicated
but terribly important subjects. We hope to produce a report before
the summer is out and we hope, thereby, in fact, to make clear
what these problems are and, therefore, enhance the whole drive
to get a good developing countries Round in the WTO. Thank you
very much indeed for answering these questions and helping us
with this report.
(Clare Short) Thank you very much.
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