Rethinking trade and globalisation to benefit everyone

Luca Visentini, General Secretary of the European Trade Union Confederation (ETUC), explains the trade union perspective on global trade rules, calling for a preventive rather than a compensatory approach when designing economic models.

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Feb 21, 2018
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Workers and trade unions are not against trade and trade deals, but we are worried about their impact. Trade does not always provide a win-win situation for everyone ­– there are winners and losers. We want to ensure that workers in the areas that lose out are supported and compensated.

We want working conditions, social rights and welfare systems to be protected. For each job destroyed by trade, we want more than one new, quality job created. And we want to move from a ‘compensation approach,’ intervening after the damage is done, to a ‘preventive approach’, coupling traditional free trade with a sustainable and inclusive economic model.

The challenge is how to make international trade benefit all, and avoid the potentially damaging consequences. This means rethinking not only the content of agreements, but also methodology, accountability, legitimacy and transparency.

We are arguing for a new, progressive EU policy on trade, development, globalisation and global macroeconomic policy. Unfortunately, at present these issues are fragmented and approached from narrow regional, national or sectoral perspectives. The global dimension is lost.

Growing globalisation is closely connected to the increased social and economic impact of trade. In many countries, and in the weakest parts of the labour market such as low-skilled jobs and traditional manufacturing sectors, globalisation frequently leads to job losses, cuts in wages and social protection and the destruction of social dialogue and collective bargaining. But whereas citizens cannot halt globalisation, they can and should have a voice in the context of trade agreements. This requires transparency and consultation of social partners to make sure trade unions can influence the process to protect workers’ interests.

We need to get back to basics. Workers care about having a job that reflects their skills and provides a good salary. Policy makers repeatedly tell us that boosting trade creates new jobs. Yet evidence suggests wide variations between sectors and regions. Some jobs may be created in services, for example, but are destroyed in other sectors. Workers in declining industries are often unable to take up new opportunities because they lack the skills or live in the wrong place. This does not mean trade is bad, but the impact is complex and needs more in-depth analysis. We must combat negative consequences by anticipating and strengthening positive ones.

For many workers who lose out, compensation is important but not enough. Helping them to re-enter the labour market requires lots of money and resources but, even then, it is not always effective. There is much talk about re-skilling and enabling people to get new, high-quality jobs, but in many areas these opportunities do not exist. Even if they do find work, people end up in lower-paid, lower-skilled positions. So instead of talking about compensation for unavoidable disasters, Europe needs a sustainable, long-term approach that shapes trade and globalisation for the benefit of all.

This implies a more comprehensive and holistic approach to trade agreements, making sure that on the one hand the sustainability and social chapters are strong and innovative in protecting workers, consumers and the environment; and on the other that trade agreements move towards an ‘economic co-operation’ approach, contributing to sustainable and inclusive growth models for all countries involved, and preventing the undesirable consequences of trade and globalisation.

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The fast pace of digitalisation is adding to anxiety. In OECD countries, some 9% of jobs are at high risk of being automated, and an additional 35% of the workforce will see their tasks change significantly. A wider, more integrated trade policy is needed to tackle job destruction and create quality jobs. It must be framed by a sustainable macroeconomic policy for growth and social inclusion. Unfortunately, this is very rarely the case now.

While globalisation and trade are supposed to take millions of people out of poverty worldwide, they also force millions more into poverty. Lower consumer prices are too often achieved by fewer people producing the same products with precarious contracts, lower wages and longer hours, and with less social and health and safety protection. To respond to this reality, prices must be fair. Equally, it is no good telling small and medium-sized enterprises (SMEs) in India or steelworkers in Europe that if they were better skilled they could keep their jobs, because it is not true. Their jobs will be destroyed if there are no rules in the global arena. Trade requires effective, transparent global governance. The issue is not about stopping trade or closing borders, it is about rules, and World Trade Organisation rules are not enough. To prevent social dumping and a race to the bottom we want a comprehensive set of rules to make globalisation fair and sustainable.

We insist that respect for freedom of association, collective bargaining rights and international labour standards must be included in trade deals. There is plenty of evidence that workers in countries with strong trade unions and collective agreements have higher wages and better conditions. European Nordic countries have successful economies because they have ample public and private investment and high levels of social protection, as well as very efficient social partnership between companies and unions that generates good wages and conditions and boosts productivity and competitiveness.

Global rules must cover social, labour, environmental, and economic governance, incorporating binding Corporate Social Responsibility clauses and International Labour Organization (ILO) Conventions. They should promote higher labour standards, enforced through regular inspections and sanctions if workers are mistreated, or if basic health and safety rules are not fulfilled. We cannot allow another tragedy like the collapse of the Rana Plaza building in Bangladesh in 2013, in which more than 1,000 garment workers died – mainly subcontractors for European and American brands.  

Trade unions are calling for independent impact assessments to predict the consequences of agreements, covering regional dimensions. We want to strengthen the OECD national contact points to monitor the OECD Guidelines for Multinational Enterprises promoting responsible business conduct, and be able to call abusive employers to account, as well as involving social partners.

The ETUC does not look at EU trade negotiations from a narrow European perspective. We defend the interests of workers everywhere, and co-operate with trade unions in other countries including the AFL-CIO in the USA, the Canadian Labour Congress, Mercosur unions and many more, to this end.

If decision makers do not address global trade in a more comprehensive way – implementing fair rules to create a level playing field in all areas – growing poverty and inequality will cause suffering for millions and pose a major risk to global peace and security.

More information:

ETUC Resolution for an EU progressive trade and investment policy

ETUC submission on the Non-paper of the Commission services on Trade and Sustainable Development (TSD) chapters in EU Free Trade Agreements (FTAs)

Luca Visentini at OECD Forum on Bridging Divides

1 Comments

Go to the profile of Peter Tal
Peter Tal 2 months ago

Unfortunately, the article brings nothing new to the table other than the old ideas. It didn't address how "rethinking trade and globalization" would minimize the social and income gaps and would benefit more people. 

Presently, the globalization benefits the large corporations rather than those who work for them below the executive levels. The situation is quite similar with the benefits of weapons manufacturers from a war or conflict - on one side people die while the industry prospers. In the globalization process, few people become very rich with much more fall into poverty.

The unfairness built-in the globalization, opportunistic business that creates the social and economic gaps, regional unemployment, migrations raise and fall of nations is a direct result of playing with unequal national and geographic rules. Simply put, should all countries - for the sake of the example - China and the western countries (as well as all the western countries) have the same identical regulations such as currency rules, equal salary for same work, equal taxation, health, benefits, housing, etc., there would not be any incentive to relocate industries and eliminate jobs for a lower cost. The profitability of making an iPhone in China or USA for sales in US, would be greater for local manufacturing as it would be for clothing and other products. Trade would be fairer, economies balanced and trade deficits would be minimal.

Competitiveness should be achieved by innovation rather than exploitation of opportunistic gaps. WTO proved being an empty shell that allowed, with the support of major interested corporations, building an unfair global system that benefits only its supporters. Trying to justify the situation without introducing major regulatory and enforcement changes would only create more poor people, more discontent with political turmoil with raise of extremism.