India, Indonesia caution against trade-labor link
India, Indonesia caution against trade-labor link
NEW DELHI (AFP): Indian Prime Minister P.V. Narasimha Rao and Indonesian President Soeharto yesterday cautioned against western attempts to link international trade with labor standards in the changing global economy.
They spelled out their stand on the first day of a conference on labor in the Indian capital where a message by Soeharto was read out to delegates from nearly 80 developing countries.
The "social clause" proposed by the United States and other western countries to the multilateral trade agreement to govern labor standards is expected to dominate the five-day meeting staged by the Non-Aligned Movement.
Such a clause could provide for the restriction or prohibition of imports from countries or industries, which do not adhere to stipulated labor standards, hurting the exports of developing nations.
"Upgrading labor standards is an ongoing process in many developing countries," Rao said in his opening speech to delegates. "But it is a different matter when trade policy is linked to labor standards."
Trade policy should not be made an instrument to dictate labor standards, the 73-year-old Indian premier said.
He said the issue should be governed by the code set out by the International Labor Organization rather than the multilateral trade agreement, and called for "non-coercive compliance to labor standards."
Soeharto
Soeharto, chairman of the Non-Aligned Movement, said in the message read out by Indonesian Minister for Manpower Abdul Latief that a trade-labor linkage could "directly or indirectly reduce the export of developing countries."
He urged developing nations to forge a common stand and to strive to improve the life of their workers so the issue will not be used as a "pretext in limiting our participation in world trade."
Participants in the Uruguay Round of trade negotiations, which led to the formation of the World Trade Organization, have left the issue of the "social clause" open.
Advocates of the clause say it is needed for "social progress" keeping pace with economic progress and that industrial countries would otherwise be seen as collaborating in the exploitation of workers in developing countries.
It is also designed to ensure a level playing field so developing countries do not gain an unfair trade advantage through cheap labor, they say.
Developing nations have argued that the advantage is tilted heavily in favor of rich countries because of superior technology, economies of scale and access to finance and marketing.
The enforcement of the proposed social clause would only make third world producers more uncompetitive and reduce employment, they say.
"The waking up of the Asian giants would seem to be causing uneasiness in the competitive world consequent on which new forms of readjustment of economies are being advocated by the affluent part of the world," said Indian Labor Minister P.A. Sangma.
Heribert Maier, deputy director general of the International Labor Organization, said both developed and developing nations needed to respect fundamental labor standards.
"No country should accept, or be seen, building its competitive advantage on the basis of a less than fair treatment of its workers," Maier said in his speech, calling for a consensus on the dispute.
Delegates to the conference, which ends Monday, will also discuss issues such as the world trade scenario, employment trends in developing countries, strategies for creating jobs and the impact of economic reforms on labor.