A joint meeting of the German and Japanese trade union confederations, DGB and RENGO, in February 2000, resulted in a joint statement on international economic policy coordination, in which the unions set out concrete proposals and demands for a social and democratic re-regulation of the world economy.
From 22 to 25 February 2000, at the invitation of the president of the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB), Dieter Schulte, a high level delegation from the Japanese Trade Union Confederation (JTUC-RENGO) chaired by its president, Washio-san, visited Germany in order to exchange views on trade unions' social and employment policy, as well as on ideas for a political re-regulation of the world economy. As a result of the meeting, the German and Japanese union confederations presented a joint statement on "international economic policy coordination" (Gemeinsame Erklärung zur Koordinierung der internationalen Wirtschaftspolitik), which contains various proposals and demands aimed at giving "globalisation" a "social dimension". The statement is addressed directly to the Japanese Prime Minister and the German Chancellor in preparation of the forthcoming G8 summit in Okinawa (Japan) in July 2000.
Amongst other matters, the joint statement covers three key aspects of international social and economic policy, as follows:
- a "new architecture" for international financial governance;
- the building of democratic structures into the global trade and investment system; and
- the promotion of core labour standards in multinational enterprises
New architecture for international financial governance
DGB and RENGO sharply criticise governments for not having learned a lesson from the recent financial crises in Asia, Russia and Latin America, making only inadequate reforms while systemic risks of future crisis remain in place. The policy recommended by the International Monetary Fund (IMF), which consists of currency devaluation, budget austerity and ensuing cutbacks in social services, high interest rates and open capital markets, is said to have damaged the livelihoods of millions of workers and their families in the countries concerned, while multinational banks and corporations have been shielded from the consequences of their own risky behaviour by subsequent IMF bail-outs. Moreover, such a policy is seen as leading to a form of globalisation which promotes "an aggravation of inequalities both within and among nations" and takes "no responsibility for the human costs of these policies".
The German and the Japanese unions, therefore, demand a more fundamental reform of the international financial architecture. Although the unions endorse the measures to create more transparency and better surveillance of international financial markets decided at the G8 summit in Cologne in June 1999, they do not believe that these measures are able to address the root cause of the problem, since they "cannot eliminate the inherent instability in international capital markets where short-term and speculative transactions of USD 1.3 trillion per day have become almost completely detached from transactions necessary for the flows of goods and services of the real economy".
RENGO and DGB call for a new architecture for the system of international financial governance, including various proposals for regulating domestic financial markets, containing volatile capital flows, constructing new international institutions, stabilising international currency values, and coordinating macroeconomic policies internationally. The unions demand, in particular:
- fundamental reform of the IMF and a reorientation of its governance and policies by instituting more democratic control and accountability and by broadening its mission to emphasise global prosperity and distributional equity;
- better fiscal and monetary policy coordination, both at regional level and between the currency blocks of the dollar, yen and euro, to ensure that exchange rates reflect economic fundamentals, rather than speculative operations, and lead to the progressive removal of large long-term current account deficits and surpluses;
- the recognition of the right of governments to control short-term foreign capital inflows and outflows in the interest of domestic macroeconomic and social stability;
- international taxation of foreign exchange transactions to reduce speculative currency flows;
- introduction of binding international standards for the prudent regulation of financial markets covering capital reserve standards, for the limitation of short-term foreign currency exposure, and for the control and certification of derivatives trading and other forms of "leveraged" investment built on credit; and
- improved information and measures on currency flows, private debts and reserves.
The unions also criticise the current debates on further reforms of the international financial system for being "held behind closed doors by central bankers and finance ministry officials without formal input from trade unions and civil society". Consequently, DGB and RENGO demand that their national governments push for the establishment of a broad-based independent international commission mandated to draw up concepts and proposals for new international regulatory framework. In addition, the unions call for the establishment of a trade union advisory board to the IMF, which is seen as another important step towards creating more democratic control within the international financial institutions.
Building democratic structures into the global trade and investment system
According to the German and Japanese union confederations, the perceived lack of democratic structures within international financial institutions is also true for the global trade and investment system. The unions accuse governments of widely ignoring the demands of trade unions and other non-governmental organisations (NGO s) to include labour and environmental rights in the multilateral trade and investment system. The failure of the negotiations on the Multilateral Agreement on Investment (MAI) in the Organisation for Economic Cooperation and Development (OECD) in 1998, and the events around the Word Trade Organisation (WTO) ministerial conference in Seattle in November 1999 (EU9912217N), are seen as underlining the need for a fundamental reorientation in order to overcome the dominant neoliberal concepts, which aim only at a deregulation of global markets.
According to DGB and RENGO, the core of a necessary political re-regulation of the world economy must be a further reform of the WTO, which has to tackle the following challenges:
- the establishment of "fair international rules" which include enforceable basic standards in the fields of labour relations, environmental issues etc. As far as labour standards are concerned, the aim must be at least a full recognition of all relevant International Labour Organisation (ILO) conventions;
- a reform of internal WTO procedures, so that greater resources are made available to developing countries, which are less able to fulfil their roles and rights as contracting parties within the organisation; and
- the opening of WTO institutions to democratic participation, for example by the establishment of a trade union advisory board.
Promoting core labour standards in multinational enterprises
Since multinational enterprises have become more and more powerful in the global market, in the view of the German and the Japanese unions they must also consider their growing social responsibility. Therefore, DGB and RENGO call on all German and Japanese enterprises to guarantee core labour standards, as laid down in the 1998 ILO Declaration on Fundamental Principles and Rights at Work, in their worldwide operations and particularly in developing countries.
The unions propose German-Japanese tripartite consultation between representatives of the governments, employers' associations and trade unions of both countries, in order to work out concrete measures for the promotion of core labour standards. According to DGB and RENGO, the result of such consultations should be a joint statement in which all parties should declare their willingness to:
- ensure that core labour standards are fully respected in the bi- and multilateral official development assistance programmes of the two countries;
- ensure that private enterprises based in the two countries fully respect core labour standards and ensure that their overseas enterprises and contracted enterprises fully understand and respect these standards;
- ensure that private enterprises based in the two countries fully respect the 1976 OECD Guidelines for Multinational Enterprises and the 1977 ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, including their related supervisory mechanisms, in designing and implementing such measures; and
- take necessary measures to guarantee the observance of these intentions.
Commentary
In the 1990s, the notion of globalisation was mostly associated with the neoliberal vision of a deregulated global market economy in which global investors and multinational companies were freed from political regulation for the benefit of the overall creation of wealth and prosperity. In reality, however, the neoliberal version of globalisation brought an increasing gap between the winners and losers in these developments, with a growing polarisation of wealth and poverty. Moreover, the international financial system became increasingly dominated by speculative flows of currencies which can lead to fundamental financial crises with dramatic social consequences for millions of people, as was recently the case in Asia.
Against this background, calls for a more fundamental reform of the operating conditions of the global economy have become more and more widespread. Among others, it has been in particular the International Confederation of Free Trade Unions (ICFTU) and the sectoral International Trade Secretariats (ITS s) which have long been campaigning for a rebuilding of the world economic structure, in order to guarantee universal social rights and democratic control of international economic institutions.
In the meantime, international trade union organisations, as well as other NGOs, have become accepted discussion partners for international institutions, and have been represented at many international conferences and global summits. When it comes to the level of political decisions, however - for example, in international institutions such as the IMF or the WTO - their influence is still relatively small, since they have no real power base at global level.
In this context, political initiatives such as the joint approach of the German and Japanese trade union confederations are of particular importance, since they might be able to endorse global campaigns at a national level, where the unions continue to have some power to put pressure on their national governments. (Thorsten Schulten, Institute for Economic and Social Research (WSI))