Poor states see menace in U.S. trade-labor link

Poor states see menace in U.S. trade-labor link

GENEVA (Reuter): Developing countries have fiercely rejected a controversial United States bid to put labor conditions firmly on the agenda for a new World Trade Organization (WTO) to be set up next year.

Indian envoy Balkrishnan Zutshi told ambassadors to the GATT on Wednesday the row over workers' rights could wreck the achievements of seven years of talks in the trade watchdog's Uruguay Round.

GATT chief Peter Sutherland said there was no question of the U.S. not joining the other 120 countries in the Round in signing its Final Act -- which sets up the WTO -- in Marrakesh, Morocco next month.

But at a news conference he accepted it was possible the "labor clause" dispute could abort a joint declaration by foreign and trade ministers which had been intended to give a harmonious launch to the new body.

"It would be most unfortunate if the ministerial declaration was not adopted by all parties," Sutherland said. He might call GATT envoys together again next week if there was any chance of a solution before Marrakesh, he added.

The Round was completed last December with wide-ranging accords on slashing tariffs and opening markets in goods and services widely seen as offering a major boost to the economies of both developed and most developing countries.

The Marrakesh gathering from April 12-15 had been intended to celebrate the achievement and launch a new committee to prepare for the advent of the WTO -- hopefully on Jan. 1 1995 -- as a powerful body to guide world trade along the free market path into the 21st Century.

Doubt

But trade diplomats said there seemed little doubt now the meeting would see confrontation over the labor issue. "I fear it could be an arena for North-South confrontation, which we have sought to avoid in GATT," said one senior envoy.

GATT, the General Agreement on Tariffs and Trade which now links 119 countries, is to be absorbed by the WTO.

Zutshi, whose country is an increasingly powerful player on the world trade scene, told the ambassador's meeting the quarrel had "menace and destructive potential for undoing what we have built so assiduously so far in these seven years.

"Indeed, this cloud has the potential to threaten the very foundations of the multilateral system on which were are committed to build the edifice of a future World Trade Organization," he declared.

Speaking for all developing countries, Brazil's Luiz Lampreia told the GATT session they could not accept the U.S. demand that a link between trade and labor standards be included in the declaration, to outline the WTO agenda.

Lampreia made clear that poorer states suspected that behind the labor issue lay a U.S. desire to protect its markets from cheaper goods.

But speaking to reporters, chief U.S. negotiator John Schmidt left no doubt that Washington would not modify its stance, despite lack of overt support from other rich countries.

"We are committed to the idea that there be a reference to the labor standards issue as one that is on the agenda of the WTO," he said after the GATT session, which endorsed a trade and environment accord and other documents for Marrakesh.

Officials of the European Union indicated they were unhappy with the U.S. stance, which they said went against an earlier agreement that no new specific trade issues were to be introduced before Marrakesh.

France, where unions have expressed particular fears over the effect on jobs of an influx of goods produced more cheaply in low-wage developing countries once the Round is implemented, has given support to the U.S. stand.

But Asian and Latin American trade envoys said this unusual alliance only reinforced their suspicions that the labor issue masked a wish to have the WTO work for rules that would allow special tariffs to be levied on their products.