From the TUC

Making the EU’s GSP worker-friendly in seven easy steps

10 Nov 2011, by Guest in International

The EU’s snappily title “Generalised System of Trade Preferences” or “GSP” is a rare creature in the world of international trade instruments: it links trade with human rights in a binding way. It rewards developing countries with access to EU markets if they effectively implement key human rights and environment conventions. But given that serial labour rights abusers such as Colombia and Georgia are still on the scheme, unions are heavily critical of it.

The EU is currently updating the GSP and we’ve put forward many ideas on how to improve it. Below is an edited speech (I’ve added some hyperlinks, cut out the blah blah) I recently gave to a study group of the European Economic and Social Committee outlining those ideas.

“I am from the British TUC, but am also here today deputising for the European Trade Union Confederation (ETUC), and the International Trade Union Confederation (ITUC) which represents trade union organisations in nearly all of the countries receiving trade preferences under GSP.

Trade unions have long supported the granting of unilateral trade preferences to developing countries under the GSP(*), and in particular, additional preference given to “GSP+” countries in exchange for effectively implementing 27 priority human rights and environmental conventions.

Yet we see little evidence that countries are implementing those commitments. A CARIS evaluation of the scheme, came to the same conclusion, in more words:  “GSP+ appears to be effective in promoting the ratifications of the 27 conventions. De jure implementation beyond ratification already faces several constraints. We do not find evidence of any significant positive effects of GSP+ here.” (page 167)

Georgia on our mind: problems with the current GSP system

Let me illustrate this problem with the case of Georgia, a current GSP+ beneficiary.

In 2006, the Government of Georgia passed anti-union labour legislation that was clearly in breach of fundamental ILO conventions, and has been strangling its trade unions ever since. Unions and the ILO have long sought to get Georgia to change, but have been given the diplomatic equivalent of the big finger by the authorities there.

Earlier this year we present a detailed complaint to the European Commission calling on them to commence an investigation into Georgia’s GSP+ status. The Commission told us at the end of August that it “regularly discusses the issue… with the Georgian authorities” and was hopeful of “progress”. And that it is reluctant to launch an investigation because “it only takes recourse to a sanctions-based approach as a last resort.”

For trade unions, the Commission’s answer sums up all that is wrong with the current GSP+ regime.

Firstly we are well beyond the stage of “last resort”. An EU Commission staff report acknowledged in 2008 that Georgia’s revised 2006 Labour Code “falls short” of the ILO Conventions, and concluded that the “…code is to be revised accordingly if Georgia wants to benefit from the GSP+ scheme in 2009.” The code was not revised and Georgia is still benefitting from GSP+.

Secondly, the very process of an investigation can lead to positive change, as was the case with El Salvador, rather than sanctions.  Trade unions are the very last people that want to see actions that cost our members their jobs. The different here is that by starting an investigation the beneficiary country realises that Europe is serious and pressured to act accordingly.

Thirdly, it is impossible for us to judge whether or not the Commission has made any progress with the Georgian authorities. We strongly doubt it. There is very little transparency in the system and a lack of clarity over what the Commission believes “progress” to be. “Progress” needs to be clearly and realistically defined, and made public so both Georgia and the Commission can be held to account.

Fixing the GSP system in 7 easy steps

In light of those concerns, there is much to welcome in the Commission’s proposal for a revised GSP regulation, and even more to welcome in the Preliminary Draft Opinion of this study group. I want to highlight some key areas that could make our welcome even warmer (For those who love gory legal detail, we’ve prepared a much longer submission).

Firstly, we welcome the chance for unions and other civil society actors to now submit evidence. Civil society is uniquely placed to monitor the situation on the ground: it is our members who are being sacked, jailed or even killed for carrying out their legitimate trade union activities. Our evidence can help complement the monitoring work of the treaty reporting bodies such as the International Labour Organisation (ILO),  the most authoritative source to be sure, but often not reporting on key issues for many years, if at all.

Secondly, at the moment the Commission decides when to conduct an investigation.  But we feel that the Commission should be required to launch an investigation where trade unions, as EU social partners, have submitted a complaint making out a prima facie case for action. Additionally, the European Parliament should have this explicit right to trigger an investigation also. This would build in an important check on the power of the Commission – something that its inaction in the case of Georgia shows is needed.

Thirdly, we welcome the long overdue transparency that the new proposal is providing for. The publication of a report every two years, on the progress that countries are making to effectively implement their treaty commitments is very welcome. But there are more places where light should be shone on the workings of the GSP. For example, the Commission should also publish its decisions, with reasons and evidence considered, when granting, suspending or terminating GSP preferences.

Fourthly, the Committee’s draft opinion states at paragraph 4.1 that countries under all arrangements “must have ratified, maintain and adhere to the conventions listed in part A”. Sadly, this is not quite true on our reading of the new regulation. The only obligation on the non-GSP+ beneficiaries is to ensure that they do not commit “serious and systematic violations of the principles laid down in those conventions ((Article 19(1)(a))” among other reasons. So they don’t even have to ratify these conventions, despite many of them, such as Iran and Syria, going backwards on labour rights. At a minimum, such countries should be require to have domestic laws that do not prohibit or seriously restrict the exercise of a fundamental labour right.

Fifthly, while we welcome the much stronger and agile process for conducting investigations under GSP+, including placing the burden of proof on the beneficiary countries, we have one serious concern with the new proposal.  GSP+ beneficiaries will now be accepted onto the arrangement as long as they have not committed a “serious failure” to effectively implement the conventions.

However a “serious failure”, in the context of the International Labour Organisation is only designated where the member governments and worker and employer organisations all agree to do so. This only happens on very rare occasions – usually twice or three times a year – meaning that many objective cases of serious failure will not be designated as such. The new Regulation is therefore setting a dangerously low entry requirement – lower than the current arrangement – and should be dropped.

But we think we understand what the Commission is trying to do: to set a reasonable entry level requirement for countries, and then encourage them to progressively improve their implementation over time. So why not just say so? Why not replace the whole clause with something like: “Beneficiary countries are able demonstrate continuous and reasonable progress towards effectively implementing the conventions.”

Which ties in with my sixth point: we strongly support this group’s call for capacity building for beneficiary countries that request it, and that it “be based on a dialogue which uses the experience of civil society to identify and target real needs”. Any public policy that seeks to influence the behaviour of the good, the bad and the ugly, needs both a carrot and a stick, and the GSP is no different.

Finally, let’s work with other GSP granting countries such as the US, so that our poor Commission colleague here today doesn’t have to tackle some serial labour rights abuser by himself.

Postscript: Since this speech was delivered, the US Government has decided to conduct an official review into Georgia’s GSP status under its own GSP programme. I doubt that the two events are causally linked.

(*) The EU’s GSP contains three arrangements: (i) the general arrangement, applying to any developing countries; (ii) the special incentive arrangement (often called “GSP+”) which grants additional trade preferences to countries effectively implementing international human rights and environment conventions; and (iii) the Least Developed Countries arrangement which grants full market access for “Everything but Arms” (often called “EBA”).