MANDELSON PUSHES EU'S LABOR AND TRADE

UNCLAS SECTION 01 OF 03 BRUSSELS 004113

SIPDIS

SIPDIS

DOL FOR ILAB
STATE FOR DRL/IL Mark Mittelhauser
GENEVA FOR John Chamberlin
USTR for Lewis Karesh, Stephen Fabry

E.O. 12958: N/A
TAGS: ELAB ETRD ILO PREL PGOV BM IN BO EUN
SUBJECT: MANDELSON PUSHES EU'S LABOR AND TRADE
STRATEGY



1. SUMMARY. EU Trade Commissioner Mandelson keeps
pushing for the inclusion and development of a
social dimension in trade policy instruments and
policies. Speaking at a Brussels conference last
week, Mandelson pressed the EU Council to adopt the
withdrawal of GSP benefits from Belarus. He also
outlined a series of EU initiatives for "decent
work" through bilateral agreements, working with the
ILO to develop "decent work" indicators, tools for
measuring trade and labor market adjustment.
Mandelson called on NGOs and unions to help reassure
developing countries that Core Labor Standards "are
not a protectionist tool, but a guarantee of
fundamental rights," stressing the importance of the
Doha Round and the WTO for jobs and poverty
reduction. DG Trade is in the midst of trying to
determine what form labor provisions might take in
their bilateral FTAs. END SUMMARY.


2. In early October 2006 the EU Commission set out
a comprehensive agenda -- called Global Europe --
for strengthening the contribution of trade policy
to Europe's competitiveness. As Trade Commissioner
Mandelson noted in addressing a Brussels conference
on "decent work" December 5, "the Global Europe
agenda argues very strongly that social justice at
home and abroad is an integral part" of the EU's
competitiveness agenda. The Commissioner said
internal EU policies designed to equip citizens "to
take the best from globalization and avoid becoming
victims of the worst," could not be dissociated from
"using external trade policies to promote growth and
sustainable development abroad." Though "tough
choices" are to be made "if Europe is to reform and
modernize," Mandelson said the protectionist
alternative was "an economic dead end."


3. Noting that "most of our companies have learnt
that decent work makes decent workers," Mandelson
defined decent work as "fairly paid, safe work,"
calling for "Working opportunities that are blind to
gender, work that is part of a wider social network
of social security and education that equips people
to adapt to change." Mandelson added: "And where we
can, we have a responsibility to ensure that the
same is true in the developing world." Focusing on
what the EU can do to promote decent work abroad, he
mentioned:

GSP and GSP+
--------------


4. Mandelson recalled that the EU this year
extended its Generalized Scheme of Trade Preferences
(GSP) to put more emphasis on sustainable
development: "Under the new GSP Plus scheme,
additional tariff preferences have been made
available to vulnerable countries that have ratified
the main international ILO and UN conventions on
labor and human rights, and that have taken strides
in environmental protection and good governance,
including the fight against drug trafficking."
Though some countries were initially "less than
enthusiastic about ratifying the ILO core
conventions in return for GSP Plus," all recipients
"have now signed." (El Salvador finally ratified all
ILO core conventions in September this year).


5. In Mandelson's opinion, the EU must "be prepared
to act against countries that "systematically flout
Core Labor Standards." The Commission had shown
such willingness vis--vis Burma/Myanmar, and again
this year after being advised by international trade
unions and the ILO of systematic violations of
freedom of association in Belarus. The withdrawal
of GSP privileges from Belarus (just agreed on at
working group level; still requiring formal approval
by the EU Council) was "a test case" of the EU's
"collective commitment to the promotion of workers'
rights as an integral part" of its trade policy
objectives. The investigation period in the Belarus
case had been "long and scrupulous." Almost four
years after the start of the withdrawal process,

BRUSSELS 00004113 002 OF 003


based on a joint complaint by international and
European trade unions, and with the involvement of
the ILO, Belarus had "not taken any real, tangible
measure to remedy the situation." The EU Council
therefore had "the responsibility to ensure the
robustness and the credibility" of the instrument to
pursue the promotion of social standards in EU trade
relations.

BILATERAL TRADE AGREEMENTS
--------------


6. Speaking on the eve of the adoption by the
Commission of draft mandates for negotiating new EU
bilateral trade deals with India, South Korea and
ASEAN countries, Mandelson said he would like the EU
to "make a step change in how we integrate decent
work and the broader agenda of sustainable
development into these bilateral agreements."
Though the EU "always rejected a sanctions-based
approach to labor standards - and that will
continue," Mandelson said the EU could "do more to
encourage countries to enforce basic labor rights,
such as the ILO core conventions, along with
environmental standards - not simply in principle,
but in practice." Cooperation and social dialogue
were important, as well as "transparency, through an
independent mechanism," to "highlight areas where
governments should take action against violations of
basic rights."

DECENT WORK INDICATORS
--------------


7. Mandelson said the EU also needed to deepen its
"understanding of how trade agreements affect labor
markets and the quality of jobs, especially in
poorer countries." This required reliable
information and indicators to help these countries
"plan the right social and employment policies to
maximize the benefits of trade opening and support
the most vulnerable into decent jobs." Mandelson
noted that the Commission Trade Directorate-General
joined with the ILO last year in a pilot project to
develop decent work indicators in Uganda and the
Philippines, and to determine the feasibility of
using employment data to assess the effects of trade
opening on labor market adjustment in developing
countries. Based on the final reports of that
cooperation, Mandelson said the indicators developed
provided "an accurate picture of the quality of work
in these countries - employment of men and women,
child labor, working hours, earnings, job security,
safety at work, social protection and more." In
partnership with the ILO, the Commission was aiming
to "extend this work over the next year" to "develop
decent work indicators in other developing
countries, and to develop a tool for assessing the
effects of trade agreements," such as the EU's
Economic Partnership Agreements with ACP countries,
on labor market adjustment and policies for decent
work.

WTO AND MULTILATERAL INITIATIVES
--------------


8. Turning to the WTO system, Mandelson said the EU
would further press the case for decent work and the
social dimension of trade policy in its 2007 Trade
Policy Review. He deplored that while a reference
to Core Labor Standards was included in the
Declaration of the 1st WTO ministerial (Singapore
1996),WTO members could not agree to include the
issue as part of the Doha Round. It was
"regrettable that many developing countries felt the
need to resist including this important area in the
negotiations." Though "developing countries have a
right to use their comparative advantage in labor
costs to allow their economies to grow," ILO core
conventions were not about labor costs but "about
basic standards." Developing countries should be
reassured that Core Labor Standards "are not a
protectionist tool, but a guarantee of fundamental

BRUSSELS 00004113 003 OF 003


rights." Mandelson called on NGOs and unions to
spread the word. He also renewed the EU's call for
ILO observer status in the WTO, which certain
developing countries continue to resist. He
concluded that trade and social policies "need to
work hand in hand" and that "making trade a part of
sustainable development means putting it at the
service of decent work."

COMMENT
--------------


9. Mandelson's Commission department (DG Trade),
which has been consulting with civil society on how
to push forward the EU's trade and labor strategy,
has been entangled in disputes with member state
governments on how to cope with cheap imports from
Asia that producers say are drowning out traditional
industry. Some countries (France and Italy, in
particular) remain worried about Mandelson's
handling of EU trade policy. By underlining the
need to respect environmental rules and labor
standard, Mandelson hopes he can move ahead with the
conclusion of new bilateral trade agreements, an
option that is gaining special significance against
the background of the persisting blockade in the
multilateral DDA/WTO talks. DG Trade is in the
midst of trying to determine exactly what form labor
provisions might take in their bilateral FTAs. They
recognize that ensuring the enforcement of labor
laws, and not just signing on to ILO standards, is
important, and they are considering what form an FTA
incentive structure might take, since they appear
disinclined to take a sanctions-based approach.

GRAY