WTO

____

IMF World Bank

INTERNATIONAL TRAINING CENTRE OF THE ILO - Turin (Italy)
26 November 2003
(Fons Vannieuwenhuyse ICFTU)

WTO
What it is, what it does and
why we dont always like it

What is it?
The World trade Organisation (WTO) is an
organisation that deals with the rules of
trade between nations at a global level.

A set of Agreements

The WTO agreements are at the core of the WTO.

They are the result of negotiations by the different
members inside the WTO.

These agreements are negotiated, agreed by

consensus, and signed by the members. (the bulk of
the worlds countries)

The agreements provide the legal ground-rules for

international commerce.
They are essentially contracts or promises that
governments have to respect.

Whos there?

The WTO members are the governments of 148

countries.
Over are developing countries and countries in
transition to market economies.

Its members resolve to abide by its rules by becoming a

member.
(Regional trade agreements are exempted and fall
outside the scope of the WTO)

Companies and employers organisations do not have a

direct influence at the WTO.
(the same applies to trade unions and NGOs.)
However, their indirect influence is considerable.
As large and powerful organisations, multinational
companies (and their employer organisations)

have large lobbying powers with their governments;

Have great interest at what happens at the WTO.

Also, as multinational companies and governments have

common interests (more international trade),
governments, to a large extent, will - de facto defend the some of the interests of multinational
companies.

History

Already in 1948, there was a failed attempt to

create an International Trade Organisation.

From 1948 to 1994, the GATT (General

Agreement on Tariffs and Trade) provided the
rules for world trade.
GATT was a provisional agreement and
organisation under whose umbrella negotiation
rounds were held.

From 1948 to 1995, there have been 8 trade

rounds.

At first, the rounds focussed on lowering tariffs

(customs duties) on imported goods.
As each round had more countries involved, it
also discussed more issues (e.g. anti-dumping
measures, specific sector agreements, services,
problem solving,).

The most comprehensive round was the

Uruguay round (1986 - 1994). 123
countries took part in the discussions.
One of the results was 22.500 pages
listing commitments by countries on
specific categories of goods and services.
A ninth round, the Doha Development
agenda is currently ongoing.

Start of the WTO

The WTO, as an organisation, was
established on 1 January 1995.
It is based in Geneva.
It has a staff of about 550 and is headed by
a director-general, Supachai
Panitchpakdi.

Who does what?

The WTO has a very limited staff at its
headquarters. It largely consists of
technical staff.
The General Council (i.e. the
ambassadors of the different countries)
is in charge of the day-to-day work at the
WTO.
Negotiations are undertaken by experts.

In the end, the ministers (representing their

governments) adopt the results of the
negotiations.
This takes place at the WTO ministerials which
is the highest authority.
WTO Ministerial meetings are held every two
years.
Some of them got famous (for example Seattle
in 1999).
The last ministerial was in Cancun (Mexico) in
September.

Democratic deficit at the WTO

Even though

The WTO structure is relatively more democratic than the IMF or

the World bank (one country one vote vs one dollar one vote)

The WTO agreements include numerous provisions giving

developing and least-developed countries special rights or extra
leniency (known as special and differential treatment).
For example, the WTO provides some technical assistance.
Also, special provisions include:

extra time to abide by WTO rules

more possibilities to use subsidies
being allowed to keep higher custom duties
-tariffs

Still, the WTO negotiating system has some built-in

advantages for the richer and larger countries.

As the markets of the richer and/or larger countries are

of much larger value, these countries can much more
easily get what they want.
For a small and poor country, its important to get
access to the major markets, so they have to accept
whatever is being offered.
For the large markets, the opposite applies: they can
continue to negotiate until they have an agreement
they like.

A large number of developing countries have already

liberalised their markets as a result of the IMF and
World Bank policies.
They therefore have less left to bargain with than they
would want to.

Decision are taken by consensus.

In practice, as there are almost 150 countries, an
alternative system exist.
The real decisions are often taken in green rooms
small meeting with only a few countries present.
These are - most of the time - the larger and/or richer
countries: EU, US, Canada, China, Japan, Australia,
New Zealand, Switzerland, Brazil, Argentina, India,
Pakistan, Egypt, South- Korea, South- Africa.

The budget of many developing countries is so

limited they do not have the possibilities to
participate in many of the meetings or to
provide policy documents.
(There are about 50 WTO-related meetings each
week in Geneva there are about 150.000
official documents on the WTO site)
The system of consensus dictates that you have
to say no to block something. Those that
arent there cant block anything.

Only about one third of the least-developed

countries in the WTO have permanent offices in
Geneva, and they cover other United Nations
activities as well as the WTO.

Many other countries have a representation of

one person to the WTO.

The complexity of the documents is another

problem: many countries even where they
have staff do not have the expertise.

Democratic deficit cont.

The actions of the WTO need more coherence with other
organisations.
And, not only with the IMF and World Bank.
The WTO also needs to co-operate more closely with
the relevant agencies of the United Nations system and
be coherent with the decisions reached at the World
Summit for Sustainable Development (WSSD) in 2002.
The WTO should endorse the Conclusions of the WSSD,
in order that sustainable development is fully
incorporated into the work of the WTO.
The WTO should strengthen the WTOs collaboration
with amongst others - UNCTAD, the ILO and the WHO.

Philosophy and
principles of the WTO

Liberalisation
The WTO is an organisation for liberalising
trade.
Its overriding purpose is to help trade flow
as freely as possible so long as there
are no undesirable side-effects.

Even though the WTO agreements are

lengthy and complex - because they are
legal texts covering a wide range of
activities - there are two principles at
the foundation of the trading system:
The Most-Favoured-Nation Principle
The National treatment principle

The Most-Favoured-Nation Principle

It means: treating all others equally.
Countries can not discriminate between their trading
partners.
To grant on country a special favour (such as lowering
customs duty rate for one of their products) requires to
do the same for all other WTO members.
MFN means that every time a country lowers a trade
barrier or opens up a market, it has to do so for the
same goods or services from all its trading partners.

The National treatment principle

Which means: treating foreigners and
locals equally.
Imported and locally-produced goods
should be treated equally (at least after
the foreign goods have entered the
market). The same applies to foreign and
domestic services, and to foreign and
local trademarks, copyrights and patents.

Many different
WTO Agreements

The WTO agreements cover three broad areas:

goods, services and intellectual property.
For each of these, there is main agreement
(containing broad principles):
Goods: the General agreement on tariffs and
Trade (GATT)
Services: the General Agreements on Trade in
Services (GATS)
Intellectual property: Trade Related Aspects of
Intellectual property Rights (TRIPS)

Under each of these broad agreements, there

are extra (sub-)agreements and annexes
dealing with specific sectors or issues.
E.g. there are agreements on agriculture or
textiles as part of the GATT agreement (goods).

Finally, there are the detailed and lengthy

schedules (or lists) of commitments made by
individual countries allowing specific foreign
products or service-providers access to their
markets.

Agriculture

The Uruguay Round produced the first

multilateral agreement dedicated to the sector
(under GATS).
The new rules and commitments apply to:

market access: tariffs,

domestic support: subsidies and other programmes.
export subsidies and other methods used to make
exports artificially competitive suffered.

As of 1995, developed countries cut the

tariffs by an average of 36%, in equal
steps over six years. Developing countries
made 24% cuts over 10 years. Leastdeveloped countries do not have to cut
their tariffs.

The problem is that subsidies are

allowed to continue.

Domestic support
Amber box: Domestic policies that have a direct effect
on production and trade (trade distorting) have to be
cut back reduced (between 13 20 %), not
eliminated.
Green box and blue box: Measures with minimal impact
on trade can be used freely.
They include:
Government services such as research, infrastructure and
food security.
Payments made directly to farmers that do not stimulate
production, such as certain forms of direct income support.
Also permitted are certain direct payments to farmers where
the farmers are required to limit production.

Export subsidies
The Agriculture Agreement prohibits
export subsidies on agricultural products
unless the subsidies are specified in a
members lists of commitments.
Here as well, countries agreed to reduce
these subsidies, not eliminate.

Whats wrong here

The agricultural sector of the developing
countries - (the most important sector
for many of them) - is losing ground
because of the cheap (subsidised)
products entering the market, produced
by developed countries.
On average, 70% of the workers in
developing countries work in agriculture.

The EU exports wheat at two-thirds of its

production cost, and sugar at only 25%. The
EU subsidises each cow by more than US$2
per day while 3 billion people in developing
countries have to survive on less than this
amount.

The US annual subsidies of US$ 4 billion for

its cotton production cause a reduction in
world prices of 26%, directly affecting the
income of the more than 10 million people in
West and Central Africa dependant on cotton
production.

The agriculture discussions were one of the

main reasons for the failure of the ministerial
in Cancun.

At the centre of the debate are the discussions

on subsidies by (mainly) the United States and
the European Union.
One of the main point of dispute was that the
developing countries wanted the developed
countries to agree to lower (and/or eliminate)
their agricultural export subsidies, as well as
the domestic support for their agricultural
sector.

According to Global Unions, the WTO

needs to end all agricultural export
subsidies and reduce and reorient other
agricultural subsidies (e.g. price
support) to social and environmental
objectives.

Textiles
From 1974 until the end of the Uruguay Round,
the textile sector was governed by the
Multifibre Arrangement.
Since 1995, the WTOs Agreement on Textiles and
Clothing has taken over.
By 1 January 2005, the sector is to be fully
integrated into normal GATT rules. In
particular, the quotas will come to an end, and
importing countries will no longer be able to
discriminate between exporters.

Whats wrong here?

Serious difficulties are arising for exports and

employment all over the world, and particularly
in many developing countries, as a result of
the phase-out of the Agreement on Textiles and
Clothing.

With the end of the quotas, many companies

are shifting from one country to another,
often leaving behind a social disaster.

For example, the ITGLWF estimates that about one

million jobs will disappear in Bangladesh.

Another problem is that a lot of these jobs go to

China, where free trade unions do not exist.

Global Unions are therefore calling for

an urgent review for the situation (employment and

working conditions in that sector) and
measures to assist emerging and fragile textile and
clothing industries - so that they can meet the
challenges posed by unregulated competition.

Services
The inclusion of services is relatively new in the
WTO.
Services represent the fastest growing sector
of the global economy and account for 60% of
global output, 30% of global employment and
nearly 20% of global trade.

The General Agreement on Trade in Services

(GATS) covers all internationally-traded
services.
For example, banking, telecommunications,
tourism, professional services,

The ongoing negotiations (for extra and more

agreements as part of the GATS discussions) are
part of the ongoing Doha agenda.

They differ a little from the overall practice of

the WTO.
They start as bilateral (country to country)
negotiations first.
However, the principle still applies that one
favour to one country applies to all other WTO
countries as well (with some possible exceptions in the
beginning).

Countries can decide which sectors

they want to open and to what extent
(e.g. whether there are any restrictions
on foreign ownership of companies).

Governmental services are taken out of

the GATS agreements.

Whats wrong here

Privatisation exercises in the service sector

have not always been met with much success.

There are more than enough examples of

privatisations gone bad

For a large number of countries, the water

privatisations, where large multinationals have taken
over public services, have been a disaster (not only
for the workers, but also often for both the company
and the public)
The privatisation of the railway system in the UK has
not worked well.

According to the WTO, nothing forces countries

to open up sensitive sectors, such as public
services.
While that is correct, nothing prevents them
from opening these sectors either.

It increases the pressure to deregulate.

At this current GATS negotiations phase, the

negotiations are secret, the offers are not
disclosed.
(it is not known officially which countries want
to open up which sectors and to what extent).

Global Unions are worried that the result of

the GATS negotiations may be that a lot of
service sectors will be privatised that should
not be.

One of the main demands of the international

trade unions movement is to build in safeguards
so that this can not happen.

Particular examples are the educational sector,

the health sector end culture.

Intellectual property

The WTOs Agreement on Trade-Related

Aspects of Intellectual Property Rights (TRIPS)
introduced intellectual property rules into the
multilateral trading system for the first time.
Creators are given the right to prevent others from
using their inventions, designs or other creations
and to use that right to negotiate payment in return
for others using them.
These are intellectual property rights.

It relates to issues such as

Copyright (books, CDs, film)
Trademarks (logos, brand name clothing)
Geographical indications (Champagne)
Industrial designs
Patents (medicines)
Lay-out designs

An recent problem in this area is how to make

sure medicines are available in developing
countries that badly need them, in particular
for HIV/AIDS.

The WTO ministers in 2001 decided that the

TRIPS Agreement does not and should not
prevent members from taking measures to
protect public health.
Exceptionally, countries can produce medicines
in such cases.
However, that only solved the problem for
countries which have the capacity to make the
medicines themselves.

Just prior to the Cancun meeting in September

2003, an agreement was reached that
developing countries could also import such
compulsory licensed medicines.
However, this must take place under strict
conditions to avoid imports of such medicines
elsewhere.

The current situation is one where it is feared

that the rules and regulations for those imports
are so strict and regulated, that the end result
may be that a large of poor people may still
not have access to life-saving medicines.

Remaining issues

In addition to continuing (or adding extra)

discussions on topics where previous
agreements already exist (market access,
agriculture, services, ), the Doha
Development Agenda also includes new issues.
E.g. the Singapore issues:

Trade and investment

Competition issues (monopoly issues, )
Public procurement (governments buying things)
Trade facilitation (cutting red-tape)

It is not clear if discussions on these issues will

continue following the failure at Cancun.

Of these issues, the investment issue probably is

the most important.
With the increase in Foreign Direct Investment
over the last decades, investment has become a
very important issue.
In 2002, FDI continued to be more important
than trade in delivering goods and services
abroad:

global sales by TNCs reached US$18 trillion, as

compared with world exports of US$8 trillion in
2002.
TNCs employed more than 53 million people
abroad.

An agreement on investment could have

enormous consequences given what is at stake.
This would definitely be so if workers rights are
not part of the agreement.
It is obvious that a situation should be avoided
where multinational enterprises can come and
go, without governments or trade unions being
able to take measures related to the respect of
the basic rights of the companys personnel.

It might become much easier for multinationals to enter

another countries market and take over.
Many countries (and their companies) lack the ability to
defend themselves against some of the larger worldwide companies.
These large enterprises often have the expertise,
financials means and a large operating chain to back up
their operations.
While some of these multinationals behave in a
responsible manner, not all do.
And, as they are not obliged to respect rights, they may
feel the obligation to violate them, as other may do it
too.

None of the other Singapore issues are

acceptable to the Global Unions as proposed.

Competition: might be favourable if, for

example, workers interests were integrated as
a part of rules for mergers.

Trade facilitation: could be favourable

But runs the risk of being to expensive for
developing countries.

Public procurement: fighting corruption is a

good thing the prohibition of using noneconomic factors isnt.

Trade policy reviews

The WTO conducts regular reviews of

individual countries trade policies.

The ICFTU publishes an internationally

recognised core labour standards
report simultaneously for those countries
under review.
The report discusses the issues the WTO
leaves out: the trade union rights of
workers, child labour, forced labour and
discrimination.

Settling disputes

WTO members have agreed that if they believe

fellow-members are violating trade rules
(breaking WTO agreements or failing to live up to
obligations), they will use the multilateral
system of settling disputes instead of taking
action unilaterally.

A procedure was set up, which is a structured

process with clearly defined stages and a fixed
timetable.
It normally does not take longer than 12 months
15 in case of an appeal before a ruling is
finalised.

The procedure

Once a case is introduced, there is a 60-day

period of consultation between the countries.
After which, if there is no solution, the panel
stage begins.

The Dispute Settlement Body (the WTO

General Council) establishes panels of experts
to consider the case.

The panel, in turn, comes back with a

report.

This panel is extremely powerful

because the panels report can only be
rejected by consensus in the Dispute
Settlement Body.
Its conclusions are very difficult to
overturn.

Both sides can appeal the report

Each appeal is heard by three members
of a permanent seven-member Appellate
Body set up by the Dispute Settlement
Body.

This appeal body has even more wider

ranging powers as their decision is final.

If the country that is the target of the

complaint loses, it must follow the
recommendations of the panel or the
appeal.
If no satisfactory compensation is agreed,
or action taken, the complaining side may
ask the Dispute Settlement Body for
permission to impose limited trade
sanctions against the other side.

Whats wrong here

The procedures of the settlement dispute mechanism

are closed door procedures.

Trade Unions, NGOs or other interested parties dont

have the possibility to bring forward any arguments.

As experts judge the arguments from countries and

experts, larger countries have again the
advantage.

These decisions can overrule any democratic national

laws that according to the WTO - violate trade
agreements. They can not be challenged by other
courts.

Core labour
standards

The Global unions have an ongoing campaign to

link workers rights with trade agreements.
Linking core labour standards to the WTO has
been the focal point of the Global Unions
campaign.
The Core labour standards are on

Freedom of association and collective bargaining

Child labour
Forced labour
Discrimination

The 1996 Singapore ministerial declaration says

on core labour standards:
We renew our commitment to the observance
of internationally recognized core labour
standards.
The International Labour Organization (ILO) is
the competent body to set and deal with these
standards, and we affirm our support for its
work in promoting them.
Sadly, the commitments did not go much beyond
words.

There is currently no direct link between the

WTO agreements and the ILO labour standards,
nor is there any ongoing work.
It is officially not part of the Doha agenda.

Nothing is included concerning the obligations

of multinational companies with regard to the
fundamental rights of their workers.

This means that as far as the WTO rules

are concerned countries can violate
workers rights.
Countries trying to gain unfair advantage
through the exploitation of workers and
the violation of their most fundamental
rights and therefore can offer cheaper
products are allowed to do so.

Many developing countries have been arguing

against the incorporation of workers rights in
the WTO agreements, on the basis that it would
constitute protectionism.
Trade unions everywhere do not agree with this
view, including trade unions from developing
countries.
As there is more and more use of the unfair
advantage of abusing workers rights
developing countries are also starting to lose
business to other developing countries the
views on the protectionism argument are slowly
changing.

Even though it could conceivably be abused as

protectionism, there are many more WTO
rules that could be seen as such.

Also, workers rights are human rights that

apply universally.
It should not be a point for discussion.
It should be the basic starting point.

Shooting your business competitor may also

make economic sense that doesnt make it
a good idea.

Safety

Article 20 of the General Agreement on Tariffs

and Trade (GATT) allows governments to act on
trade in order to protect human, animal or
plant life or health, provided they do not
discriminate or use this as disguised
protectionism.

A separate agreement on food safety and

animal and plant health standards sets out the
basic rules. It allows countries to set their own
standards. But it also says regulations must be
based on science.

The environment
The WTO has no specific agreement dealing with the environment
(only a Trade and Environment Committee).

The WTO is only competent to deal with trade.

In other words, in environmental issues its only task is to study
questions that arise when environmental policies have a significant
impact on trade. The WTO is not an environmental agency.
If the committee does identify problems, its solutions must
continue to uphold the principles of the WTO trading system.

The WTOs committee says the most effective way to deal with
international environmental problems is through the (already
existing) environmental agreements.

The IFIs
(International Financial
Institutions)

IMF and World Bank

The World Bank (WB) and International

Monetary Fund (IMF) were founded in
1944 in Bretton Woods, USA.

They were created as companion

organisations to the United Nations.

The IFIs are meant to contribute to

financial stability and economic
growth, leading to a more stable and
prosperous global economy.

What do they do?

IMF
The IMF main responsibilities:

international monetary co-operation;

growth of international trade;

Exchange rate stability;

establishment of a multilateral system of payments; and

making its resources available (under adequate safeguards) to

members experiencing balance of payments difficulties.

The main functions of the IMF

Surveillance:
Regular dialogue and policy advice

The IMF discusses with countrys authorities (usually annually)

the policies that are most conducive to stable exchange rates
and a growing and prosperous economy.

Technical assistance:
Offered in several areas, including

fiscal policy
monetary and exchange rate policies,
banking and financial system supervision and regulation and
statistics

Financial assistance
Available to give member countries the breathing
room they need to correct balance of payments
problems
Continued financial support is conditional on effective
implementation of this programme.

Reducing poverty
The IMF provides financial support through its
concessional lending facility, the Poverty Reduction
and Growth Facility (PRGF) and through the HIPC
(Heavily Indebted Poor Countries) initiative.

World Bank

The World Bank promotes

long-term economic development and

poverty reduction

It provides technical and financial support to

help countries reform particular sectors or
implement specific projects.
For example, building schools and health
centres, providing water and electricity, fighting
disease, and protecting the environment.

The different divisions of the

World bank
One group - Five agencies

IBRD (The International Bank For

Reconstruction and Development):

provides loans and development assistance
to middle-income countries

IDA (International Development Agency):

Interest free loans and grants to poorest

countries

IFC (International Finance Corporation):

Financing private sector investments and

technical assistance to governments and
business

MIGA (Multilateral Investment Guarantee

Agency):
Provides guarantees to foreign investors also
technical assistance to help developing
countries promote investment

ICSID (International Centre for the Settlement

of Investment Disputes)

Co-operation and overlap

IMF World Bank

There is a lot of co-operation between the IMF

and the World Bank as there are many areas of
overlapping responsibilities.

There are many joint-meetings and missions.

(E.g. the annual meeting of the boards of
governors of the IMF and the World Bank)

The membership of both organisation is the

same.

Joint initiatives

The IMF and World Bank have jointly launched two

major initiatives to help poor countries.
In 1996, the IMF and the World Bank introduced the
Heavily Indebted poor Countries (HIPC) initiative
reduce the external debt burdens of the most
heavily indebted poor countries.

In 1999, the IMF and the World Bank initiated the

Poverty Reduction Strategy Paper (PRSP) approach
a country-led strategy for linking national
policies, donor support, and the development
outcomes needed to reduce poverty in low-income
countries.

Structural Adjustment Programmes

(SAPs) as loan conditions

Starting in early 1980s, IMF, WB and regional

development banks required the application of
Structural Adjustment Programs (SAPs) as loan
conditions.

SAP: program for reforming an entire sector or economic

structure of a country.

During the 1980s, more than 70 developing countries

apply SAPs designed by the IFIs on the pretext of
reducing or avoiding indebtedness.

During the 1990s, most of former centrally-planned

economies apply SAPs recommended by IFIs, claimed
to be necessary steps for building a market economy.

Philosophy

Reduction of role of the state will lead to

countries attracting more private investment
into the economy.

The liberalisation of trade and investment will

reduce prices, increase productivity and
stimulate economic growth.

Reduction of labour costs will increase job

creation, and reduce unemployment and
poverty.

The failure of the philosophy

The IFIs have not succeeded in preventing an

increase of poverty and inequality.

In general, there has been slower growth and more

inequality after the introduction of SAPs in the 1980s.

During the 1990s, the number of people living in

extreme poverty has increased in all regions except
Asia.

In most developing/transition countries, real wages

have fallen.

The main problems of the IFI

structural reform proposals

Privatisation
Privatisation of state-owned enterprises is often
included as part of specific IFI loan conditions.
Privatisation often leads to:

reduced access to services for the poor

job losses
decline in working conditions

All proposed privatisations must be subject to consultations and

a social impact analysis.

Government and IFIs must accept to negotiate with unions.

Government and IFIs must accept to examine alternatives to

privatisation, including IFI assistance for improved public services.

Labour Market Flexibility

IFI-sponsored reforms often include:

reducing or freezing wages

eliminating job security provisions
eliminating limits on working hours
restricting collective bargaining rights

All these measures can reduce living standards of working

people and increase poverty.

Government and IFIs must recognize good labour standards as

part and parcel of a poverty-reducing development strategy.

Government and IFIs must agree to promote respect of

fundamental workers rights, i.e. the ILOs core conventions.

Liberalization of Trade and Capital Flows

IFI-sponsored reforms often include
reduction

or elimination of import tariffs

other restrictions on imports and capital flows.
Such reductions can harm domestic agriculture and
industry and lead to job loss, foreign control of
assets, rapid outflow of capital.

Change of trade and investment regime must be subject

to consultation, social and economic impact analysis.

Market Liberalisation and Deregulation

Reforms often include

eliminating price controls

eliminating price subsidies
eliminating government as buyer and seller
reducing private sector regulation
price increases of essential goods
imposition of user fees on public services.

Market liberalisation and deregulation must be subject to

consultation and an analysis of its social impact.

If they play an important role in reducing inequality, price

restrictions or subsidies should be maintained or replaced by
other social protection measures.

Pension Reform
Reforms often include partial or total privatisation
of old-age pension systems.

These pension reforms often result in

reduced pensions or pension security.

Government should examine ways to fix public

pension system, if one exists, rather than
privatise as the only option.

Fiscal and Monetary Policy

In order to reduce the government deficit, reforms
often includes pressure to
increase taxes or
reduce public expenditures
raise interest rates - try to sustain the value
of the currency, in order to control inflation.

The choices made on such issues have

profound implications for levels of employment
and living standards.

Growing Resistance Against IFI Policies

Many recent meetings of the IMF and WB have been

met by large demonstrations or other condemnations.

Massive strikes or demonstrations against structural

adjustment or austerity policies recommended by the
IFIs took place in many developing countries.

In general, it can be said that the IFIs are currently in a

crisis of legitimacy, with a large part of the world public
opinion questioning their purposes or even their
existence.

How the IFIs Have Reacted to the Crisis of Legitimacy

The IFIs have adopted new transparency policies,

releasing project documents and agreements previously
kept secret.

The IFIs have increased consultations with unions

and NGOs.

The IFIs have accepted to reduce the debt of many poor

countries and declare poverty reduction their
overarching goal.

WB has accepted to promote the Core Labour

Standards (CLS).

Basic Demands Made by Global Unions

Stop requiring SAPs (as presently constituted) as loan conditions.

Accept to provide financing of public services and state-run

pensions without demanding their privatisation.

Support labour reforms only when they respect ILO conventions and
require that WB-financed projects abide by CLS.

Extend debt relief to a greater number of countries.

Allow countries to use capital controls and apply debt payment

moratoria when in difficulty.

To end with some good news

The World Bank has shown some signs of improvement lately.
In February 2003, the Bank has released a report in which it said
that, in general, trade unions had a positive impact on the
development of an economy.
A high degree of union affiliation often links to
more income equality
less wage discrimination against women and minority workers
an improved economic performance.
The report also said that the positive impacts of unionisation tends to
be greater in countries with highly coordinated collective
bargaining than in countries where the labour movement is more
fragmented.

In a report form June 2003, the World Bank

recommended to the governments of Asia to improve
their track record on core labour standards.
The report stated that econometric evidence shows
that, instead of being a threat, stronger labour rights
are associated with higher export performance in East
Asia.
In other words: labour standards are good for the
economy.

In September 2003, the Bank indicated that the

International Finance Corporation (IFC) would include
the respect for workers rights as a condition in their
future loan agreements.

In all cases when unions dealing with IFIs encounter difficulties,

require information, or seek advice, please contact:
Global Unions - Washington Office
Peter Bakvis, Director
E-mail: pbakvis@earthlink.net
Fax: 1-202-463-8564; Phone: 1-202-463-8573