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273rd Session
Geneva, November 1998


Report of the Working Party on the Social Dimensions
of the Liberalization of International Trade

Oral report by the Chairperson of the Working Party,
on the Social Dimensions of the Liberalization of International Trade ,
Mr. Lyne (Government, United Kingdom),
as adopted by the Governing Body

I must just take up a few minutes of the Governing Body to deliver the customary oral report of the Working Party of which I was elected Chairperson at the meeting on 16 November to succeed Ms. Hartwell.

The Working Party considered two agenda items, on each of which papers had been prepared by the Office. First, an overview of global developments and Office activities concerning codes of conduct, social labelling and other private-sector initiatives relevant to labour issues; and secondly the Office's progress report on the country studies on the social impact of globalization.

On behalf of the Working Party the Chairperson expressed deep regret at the passing of M. Yvon Chotard, former Chairperson of the Governing Body, and conveyed sympathy to M. Chotard's family and to the Government of France.

Agenda item 1, the overview of global developments, received a measured and constructive discussion. A wide spectrum of use was reflected on the subject of codes of conduct, social labelling and other private-sector initiatives. Delegations commended the Office on the quality of the paper submitted to the Working Party.

A number of points emerged clearly from this exchange of views. The Working Party noted an established pattern -- which was described in the Office's paper as a universal reality -- and a developing phenomenon of vigorous activity on this subject by private organizations and by joint private and public partnerships. The issues in question were the subject of growing public discussion.

The relevance of these issues to the ILO and its objectives was increasingly recognized. Several speakers expressed a desire to see more consistency and coherence in the development and implementation of these initiatives and in the principles which they addressed. Speakers pointed to the need to keep in mind the significance of national and regional particularities and of differing cultural and economic backgrounds. Some speakers expressed strong concern about the negative effects of social labelling in developing countries and about any ILO involvement in promoting social labelling programmes. Concern was also expressed over the risk that voluntary and spontaneous activity might become an imposed system and about whether or not this activity either went beyond or fell short of the established principles of the ILO.

The Employers' group insisted that the fact that an enterprise chooses to adopt or participate in such initiatives or chooses not to do so should not carry with it any distinction that one enterprise is good and the other is bad for that reason, and the choice should not be compulsory in any way.

Various views were expressed on the relationship between the 1998 Declaration on Fundamental Principles and Rights at Work and on any ILO position on codes -- including the view that, while complementary, these two subjects should be handled separately.

From this useful discussion it was possible to draw a number of conclusions. First, there was a consensus that the Office should continue to pursue its normal responsibilities regarding the collection of information and analysis on the subject of private initiatives, as well as the appropriate dissemination of information. Secondly, it was agreed that any activities ultimately undertaken by the Office should respect the voluntary nature of the phenomena. Thirdly, it was also clear that, while progress had been made and there had been some convergence of views, there was not yet a consensus on how far the Office should go in offering advice or in actively promoting more consistency in the principles underlying these initiatives or in facilitating their implementation. A large number of delegates took the view that more extensive or proactive involvement should be undertaken in order to fulfil the ILO's mandate in this area, while other delegates expressed strong exception to such a course. Of particular concern to the Employers was the issue of whether the ILO had a mandate to engage directly with enterprises, or to become, in their view, quadripartite by associating the Office with NGO activities in this field.

In conclusion, on this first agenda item the Working Party agreed that work on the subjects that it covered should continue with a view to further discussion at the Working Party's next meeting, in March 1999. It requested the Office to prepare a short and focused document for that meeting, without prejudice to any decisions which might ultimately be taken.

The Working Party asked the Office to take account of the views expressed in the discussion, and further to elaborate on the questions raised in the Office paper document, GB.273/WP/SDL/1, about the various courses which the Office might adopt. It was agreed that the paper should expand in the direction of the options proposed in paragraph 139 of the present document, while simultaneously exploring the issues and lacunae identified in paragraph 9 and their possible relevance to the range of activities. The Office was asked to indicate the resource implications of possible activities and to consider appropriate arrangements for their coordination. The paper should take into account ways in which the Office could examine the impact of codes and other initiatives on enterprises in developing countries and on their comparative advantage in the globalized market place. It was also agreed that the Office paper should address the way in which technical assistance could help enterprises, especially small and medium enterprises and those in developing countries with regard to these issues.

As regards the second agenda item -- the progress report on the country studies on the social impact of globalization, the Working Party noted that the Office paper was an interim account of the work on the country studies. The Office aimed to complete this work by March 1999 with a view to a fuller discussion of the subject at the next meeting of the Working Party. In discussion, a number of points were made for the guidance of the Office as it completed the exercise.

The progress report also stimulated some discussion of the social impact of globalization. The Employers expressed particular concern over the adverse effects of globalization and the need to take steps to correct such trends and reduce the divide between developing and developed countries. The report had noted the continuing commitment of governments to the liberalization of trade and of foreign direct investment, and had expressed the view that social problems were more often attributable to domestic causes than to globalization. Some delegates argued that there was little evidence of gains from globalization, while the negative consequences of the process were manifest and had been illustrated by the Asian financial crisis. However, it was widely agreed that social institutions and policies could be a key factor in maximizing the gains from globalization, while minimizing social costs. These policies and institutions included: core labour standards; education and training; a well-functioning social safety net; and labour legislation which balanced labour market flexibility with the protection of workers' rights.

The Task Force was encouraged to identify policies which had proved useful in addressing globalization. A number of specific comments and points of criticism were expressed on those country studies which had already been prepared. The Chairperson reminded the Working Party that specific issues should be taken up in the tripartite meetings held to discuss the reports in the countries in question.

On methodological aspects, some delegates suggested that the results of this exercise should be shared with other international organizations, possibly through holding a joint seminar with the World Bank. It was agreed that the pros and cons of debating reports at subregional level should be examined. The possibility of commissioning additional country studies was raised. The Working Party considered that this could best be examined at a later stage when the first round of reports had been completed.

The Office took note of the substantive comments and will reflect them in the synthesis report to be presented to the Working Party in March, together with a set of six or seven country studies.

The Office also took note of country-specific comments. Further work, including the practical modalities for the proposed joint seminar with the World Bank, can be discussed by the Working Party in March.

A strong theme to emerge from this discussion was the desire of several delegations to see wider discussion within the framework of the ILO of the highly topical subject of the social impact of globalization, and the Chairperson undertook to reflect that feeling in his report to the Governing Body.

Finally, with regard to both agenda items I would like to make two points. First, the future of this Working Party was not discussed in the meeting held on 16 November, but it will need to be considered in the course of 1999 and by the incoming Governing Body, given that the Working Party's existing programme of work may be largely completed at the March meeting.

Secondly, I would record that this meeting took place in a notably constructive and businesslike atmosphere, for which I was grateful to all participants. I would like, naturally, to pay tribute to the sterling work conducted by my predecessor in the Chair, Miss Matilda Hartwell, and also to the support, the wise guidance and the advice which I received from the two Vice-Chairpersons, Mr. Brett for the Workers' group, and Mr. Tabani for the Employers' group.

Geneva, 20 November 1998.

Updated by XX. Approved by XX. Last update: 26 January 2000.