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274th Session
Geneva, March 1999


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

The Governing Body took note of the following oral report and of additional comments by the Employer and Worker Vice-Chairpersons and the Chairperson of the Working Party. Those comments will be recorded in the minutes of the session.

Mr. LYNE As Chairman of the Working Party and in a spirit of cricketing fair play this is a report which I have agreed with Mr. Tabani and Mr. Brett, the Worker Vice-Chairperson. It has three parts: private-sector initiatives; country studies on globalization; and then at the end I wish to make a few remarks about the future of the Working Party.

As regards private-sector initiatives, the framework for the Working Party's discussion was a further report by the Office. This took account of previous papers and discussion at the 270th, 271st and 273rd meetings of the Governing Body. It was noted that the Working Party had now reached the point at which it should, to quote the words of the Office paper, "express its views on appropriate ILO action in this field in order to guide the Director-General in the preparation of future proposals". With a view to formulating such views on private sector initiatives, the Working Party had a usefully focused debate.

It was noted that voluntary and diverse codes of conduct had become a widespread practice in many countries and many sectors, with an effect reaching well beyond the individual countries concerned. The key issue for the Working Party was to consider how, in pursuit of its constitutional and strategic objectives, the ILO could best interact with these voluntary initiatives.

In addressing this question a number of over-arching considerations were registered. First, the Working Party underlined its confidence in the Director-General, who was present throughout the discussion of private-sector initiatives. It was recognized that the ILO should give an appropriate response to requests made to the Organization on matters lying clearly within the ILO's terms of reference. The view was expressed in this regard that the provision of this assistance should be in the form of information and advice and should not in any way put the ILO in a position of accepting or rejecting particular company initiatives. To fail to respond would damage the credibility of the Organization.

Secondly, concern was expressed by some speakers that codes of conduct might be developed into what was termed "soft law"; or that moves might be made through the aegis of the ILO to impose a single, uniform code of conduct. In summing up, the Chair therefore emphasized that there was no question of the ILO imposing any code. The process under discussion was an entirely voluntary process: there was no proposal before the Working Party for the development of a uniform code. Indeed, as many speakers had stressed, the adoption and content of codes has been a matter for individual enterprises. While the 1998 International Labour Conference had adopted the Declaration on Fundamental Principles and Rights at Work, implementation of the Declaration was under separate consideration and was not a question for this Working Party.

Against that general background, it was widely agreed that further research should be pursued, both in the new areas presented in the document and in further areas. Speakers emphasized various priorities for research, including the effects of codes on ILO objectives, such as improved labour practices and job creation; the use of codes by suppliers and the problems posed by the diversity of such codes; the experience and views of constituents worldwide on these phenomena; and the impact of codes on fair market competition, especially in developing countries. the need for coordination within the Office on the various aspects of research was made very clear.

A diversity of views was expressed on the way in which the Office could assist enterprise needs in this area. Information was provided by the Office regarding the nature and breadth of requests received for information or other services in this respect. Some members stressed that adequate research should be conducted as a first step towards effective accompanying services, especially in new areas of assistance and future directions beyond assistance. Others took the position that assistance in the form of information, advice and consultation should proceed in tandem with research. Still others believed that the Office should proceed as well with new targeted programmes of assistance. In general, some suggested that certain operating principles could assist the Office in ensuring consistency between assistance in this area, on the one hand, and the fundamental principles, objectives and methods of work of the Organization on the other. A number of speakers insisted that the Office work in close cooperation with its constituents, including governments as well as employers' and workers' organizations. Others urged the Office to proceed in a supportive and non-discriminatory fashion, to balance developed and developing country interests and to seek to maintain any competitive advantage enjoyed, particularly by developing country enterprises.

The Working Party was furthest from a consensus on the longer-term question of a so-called proactive position of engagement. Discussion focused on the development of benchmarks reflecting best practices, and the possible establishment of a framework for verification of performance for those who might desire feedback on their practices. As to benchmarks, a number of supportive views were heard which focused on any future development in the context of fundamental principles relating to workers' rights and a supportive stance respecting the freedom of decision-making and operation of enterprises. Other speakers argued that the ILO should not be involved in selecting or promoting recommended benchmarks either on the basis of existing codes or even on the basis of the Declaration. The need to take into account the economic, social and cultural particularities of the diverse countries and enterprises concerned was also noted. Issues for further discussion centred on the methods to be used by the ILO in fulfilling its function, as one speaker called it, to serve as the "social conscience of the world of work". Diverse views were expressed on the issue of verification of voluntarily-accepted codes, and it was generally agreed that this was a subject for future consideration.

To conclude on this first item, it was agreed that future activity would be enriched by further Office research and experience in supportive services in this area. One option would be to convene meetings with a broad range of interested constituents. As was intended, the meeting of the Working Party has now provided the Director-General with extensive guidance. He, for his part, has made clear his intention to act in close consultation with the tripartite membership in moving forward in this area.

I turn now to the second subject that was on the Working Party's agenda, which was the question of country studies on globalization. Here the Working Party had a further constructive discussion on the progress report on the country studies on the social impact of globalization. The report incorporated the findings from six country case studies already completed on Bangladesh, Chile, Mauritius, the Republic of Korea, South Africa and Switzerland, as well as additional research covering a wide range of countries, going beyond the six mentioned.

Comments were made first on the country studies; secondly on the general findings of the document; and thirdly possible follow-up work.

As regards the country studies themselves, representatives of the countries that had been studied thought the exercise had been a useful one. In some cases governments were taking into account the results of the studies in policy formulation. The fact that the studies had focused on a wide macroeconomic approach that went beyond labour and social policies was welcomed.

Secondly, the findings of the report, though preliminary, were well received by Working Party members. Widespread support was given to the main conclusions of the report, namely that governments were not powerless in the face of globalization: there existed a range of domestic policies, including in the area of education, training, labour law, social security and core labour standards, which could improve the return from globalization while reducing social costs. The debate revealed concern with certain social developments that appeared to go hand-in-hand with globalization, notably widening social inequalities, a growing perception of job instability and, in the case of developing countries, a risk of increasing economic vulnerability. However, protectionist solutions were explicitly rejected in all the countries under study, a view echoed by Working Party members from other countries. Finally, it was pointed out that the report contained certain apparent inconsistencies or contradictions, and the Office was asked to address them when revising the report.

Thirdly, on possible follow-up work, the Working Party also expressed interest in the suggestions for further work set out in paragraphs 87, 88 and 89 of the report. Several participants spoke in favour of presenting the results of the final report to a wider audience, including representatives from other international organizations, such as the World Bank and the World Trade Organization.

The Task Force in charge of this work has undertaken to finalize the report as soon as possible in the light of the comments and observations made at the meeting. The final version will also include the findings of the case study of Poland, which has yet to be completed. The outcome of this work will, we suggested, be discussed at the 276th Session of the Governing Body in November, and a proposal has been made that colleagues from other international organizations should be invited to that to take part in the discussion. The Office has noted with interest the Working Party's positive response to follow-up work proposals, for which a detailed research agenda will be proposed at a future session of the Governing Body.

As regards the third item that I mentioned very briefly -- the future of the Working Party -- I would like to add one comment. In my introduction at the beginning of the Working Party's meeting, I observed that this question would be a matter for the Governing Body to decide in due course, and I reminded the Working Party that the membership of the Governing Body would be renewed at elections to be held in June at the International Labour Conference. During our discussions there was a substantive comment on the future of the Working Party from one delegation. Other delegations will doubtless wish to take a position at a later stage. It will be not for the Working Party itself to decide its own future, but for the new Governing Body to take a decision on that, perhaps when it decides on the appointment of the various Governing Body committees.

Geneva, 23 March 1999.

Updated by VC. Approved by NdW. Last update: 26 January 2000.