Statement to the Storting on Trade Policy and Human Rights by Minister of Trade and Shipping Grete Knudsen, 10 October 1996

Statement to the Storting on Trade Policy and Human Rights by Minister of Trade and Shipping Grete Knudsen, 10 October 1996

Madam President,

The government and authorities of each country are responsible for ensuring that human rights are respected within the boundaries of that country. At the same time, however, every country has the right to follow a path of development that is in accordance with its own traditions and preferences. It is in the interface between respect for other cultures and respect for the fundamental civil, political, economic and social rights of every individual that we must seek our approach to the relationship between trade and human rights.

The Government supports the basic idea of a global ethic based on minimum standards that every international organization and political association must follow. This is not the same as saying that Western-style modernism should be the model for all development all over the world. All cultures are to some extent based on shared human experience, with common roots and certain common ideas. No one is unaffected by questions of right and wrong. The global civil culture that has grown up in the last few decades and that has established certain fundamental human rights in the form of a small set of normative standards is therefore a very good basis for our international standpoints and commitment.

Today the whole world is our neighbourhood, and each and every one of us must share in the responsibility for developments in both the environmental field and the field of human rights. In some areas this requires a change in attitudes and in the way we should conduct ourselves as individuals.

We feel that ethical commitment cannot stop at the borders of the nation state. We cannot have one set of morals for use at home and one for abroad or, for that matter, a third for the stateless, transnational corporations that do not define themselves as being either at home or abroad.

Because people and cultures are so different, it is essential to define and maintain certain common values and principles that are clearly defined and agreed on by everybody.

The Foreign Minister has mentioned a number of challenges facing us in the field of human rights. In my statement I shall describe in more detail the Government's efforts to promote social and economic rights as set out in the UN Covenant of 1966 and in key ILO conventions.

My statement is mainly concerned with a set of five fundamental rights and freedoms:

• the prohibition of forced labour
• the elimination of child labour exploitation
• non-discrimination in employment
• freedom of association
• the right to organize and bargain collectively

In the following I shall use the international term core labour standards to refer to these rights and freedoms.

The globalization of the economy and of business and industry is a fact. Norwegian enterprises are being established outside our borders and operate in markets that have developed differently from ours, and under unaccustomed forms of government. We know, for example, that the countries of South-east Asia will make their mark on the entire international community, the world economy, technological development, the global environment and the development of international cooperation as a whole. We therefore have to respond to the rapidly changing situation in this part of the world. I would like to emphasize four aspects of this globalization process:

• growing trade in goods, exchange of services and movement of capital between countries
• increasing foreign investment and establishment outside national borders
• a growing tendency for the final product to be produced under subcontracts in several different countries
• a growing tendency for world trade to consist of inter-company trade within corporations that operate in several countries

A number of companies are transnational and are neither able nor willing to be subject to control by a nation state. Trading and cooperation with others is, as the expression implies, a two-way process, a process that involves exchanges at the economic and human level, across national boundaries and cultures. Usually this is to the benefit of all parties. I should therefore like to emphasize that economic development and increased trade generally help to improve opportunities for safeguarding human rights in a global perspective.

On the other hand, the process of internationalization involves a number of human, moral and practical challenges that must be taken seriously.

The Government considers that there are two key strategies that will be effective here:

• The development of a common binding set of international rules and standards
• The development of internal quality standards and ethical norms by each individual actor

Our approach must be coherent in the sense that human rights, security, development and democracy are combined in an integrated whole. The Foreign Minister has just emphasized that Norwegian commitment outside our borders must be reviewed in each individual case. We must make a holistic evaluation of the situation in each country and for each company. At the same time major Norwegian actors that have to establish themselves in a new market need a degree of predictability and a long-term perspective. This takes time. No one is served by short-term yo-yo strategies. If international sanctions are to be imposed, we must also consider how we can best target them, in other words, how to ensure that they have an impact on an oppressive regime and not an innocent population. We therefore need a debate that distinguishes between the appropriate measures, which range from constructive dialogue to critical dialogue to international boycott.

The best approach we can adopt is to find concrete answers to the question of what each individual actor can do better, both on his own and together with others. We need a stronger global focus. We also need greater local awareness, a concrete approach and a clear definition of the roles of the various actors. The work of NGOs in revealing unacceptable conditions, in increasing consumer awareness and in demanding stricter standards for the labelling of goods contributes to this end. Today goods and services stand for values that are not merely economic; they also have, for example, social and environmental implications.

Of the four points I mentioned above, only trade in goods and services has so far been properly regulated. However, globalization has meant that a number of areas related to trade are now candidates for more stringent international regulation within the framework of the World Trade Organization, such as investment, competition rules, the environment and the more controversial area of the relationship between trade and core labour standards. This is an area where Norway is particularly involved. We have proposed a review of these matters, and are now working together with a small number of other countries to have the topic placed on the agenda for the ministerial conference in Singapore in December (the WTO's first ministerial conference).

• If the WTO cannot deal with important and highly relevant political topics such as respect for labour standards, will the organization gain the international credibility and strength that is needed in other areas?
• If the world's most important organization in the field of trade has no clear position on human rights questions, how can we require the border-less multinational corporations to comply with similar ideals and put them into practice?
• How should we divide roles and responsibilities between the Norwegian authorities and Norwegian firms when we enter markets on the other side of the globe?
• Should we assume that Norwegian-based enterprises abroad should take a more active responsibility for trade union activities, non-discriminatory treatment of women and minorities, freedom of expression and environmental awareness in and around their enterprises?
• What should be the role of the employers' and employees' organizations and the NGOs?

These questions need to be the subject of more attention and more intensive debate in political circles, the media and public opinion.

I would like to emphasize the importance of two areas in particular: the transnational corporations and the NGOs. Today a handful of companies control a major part of world trade. Until the necessary global control and international rules have become a reality, international cooperation and the companies themselves set those limits that are necessary and possible. Active participation by individuals in NGOs is an important democratic corrective in an international context. Trade unions, youth and women's organizations, religious and humanitarian organizations, environmental organizations and human rights organizations are the world's conscience. The work of NGOs and enhanced consumer awareness contribute to a stronger focus on and improvement of the human rights situation.

We are interested in further developing the cooperation between the social partners, Amnesty International, Norwatch and any others who are involved in the ethical aspects of international trade and commerce. And we expect that any of our firms which operate internationally will do their utmost to develop strategies that include ethical considerations.

Norwegian social democracy has sound and well-established traditions in this area. High welfare standards are a necessary part of the realization of the welfare state. They cost, but they repay the investment. The close cooperation between the authorities and the employers' and employees' organizations has resulted in ordered working conditions and guaranteed standards in our own country.

This has provided stable, predictable conditions and contributed to our welfare. This model cannot of course be uncritically transferred to other countries. But it can be used as an example of how high welfare standards, a secure network and rights can contribute to economic progress. One of the tasks of our foreign service missions is to emphasize the importance the Government attaches to labour standards as a contribution to economic and human development. Through the budget of the Ministry of Foreign Affairs we provide up to 100 per cent support for projects run jointly by the Confederation of Norwegian Business and Industry and the Norwegian Confederation of Trade Unions and their respective sister organizations in our partner countries with the aim of safeguarding and strengthening workers' rights. This work should be intensified.

In order to follow up the debate on child labour in the Storting on 2 June last year the Ministry of Foreign Affairs commissioned the Institute for Applied Social Science and the Institute of International Affairs to draft a report on child labour in connection with international trade and Norwegian imports.

The report showed that a very small proportion, probably less than 0.5 per cent, of the goods imported into Norway are produced with the help of child labour. It concluded that trade restrictions are not a suitable means of combating child labour. The most important trade policy measure in relation to child labour is to take steps to open up markets for exports from developing countries. The report also argues that the developing countries themselves must bear the main responsibility for reducing child labour, and that any measures we implement must be based on cooperation with these countries.

Norway has actively encouraged the OECD to carry out a study of the relationship between trade, employment and labour standards. The analysis was presented to the ministerial conference in May this year. No definite conclusions could be drawn, but the fact that the study only found weak correlations does not support the widespread belief that low labour standards provide a competitive advantage. This in itself is positive.

In order to follow up the report, Norway invited a number of developing countries to a joint seminar under the auspices of the OECD on 3 - 4 October. The discussions confirmed that there is a need for an international dialogue on trade and core labour standards. The developing countries expressed support for core labour standards, but are, not surprisingly, strongly opposed to the idea of linking trade and labour standards in the WTO.

In further international work on the issue of trade and labour standards, it will be important to find an approach which promotes dialogue rather than polarization. Many industrial countries have already introduced requirements for compliance with certain labour standards as a condition for improving market access for developing countries. The USA already applies such conditions, and the EU is planning to introduce similar conditions. Norway believes there is a risk that such unilateral solutions may undermine the multilateral trade system, in which case the developing countries will suffer, or that the developing countries will refuse to participate at all if such rules are introduced without their being consulted in any way.

It is therefore essential that the relationship between trade and labour standards is examined in a multilateral context. Thus as soon as the Uruguay Round was completed we suggested that the relationship between international trade and labour standards should be followed up in the WTO.

The Government has sought to promote an open discussion in the WTO. One important objective of such a discussion would be to explode current myths. Perhaps the most important of these is the myth that the introduction of labour standards has a negative effect on competitiveness. There is still very strong opposition both from developing countries and from many industrial countries to the idea of raising the issue within the WTO. The developing countries in particular fear that such a discussion may result in new WTO provisions that penalize them for one of their most important competitive advantages, i.e. cheap labour.

This is a legitimate fear. Whenever new topics and conditions are discussed, protectionist instincts come to the fore. This is why I believe it is important for countries like Norway to maintain such a high profile in efforts to place trade and core labour standards on the WTO's agenda. Internationally, we have a reputation as a defender of open trade based on common rules. The basis for this reputation was made clear during the WTO's review of Norwegian trade policy earlier this year. We are seldom suspected of having ulterior protectionist motives.

We are now doing our best to take advantage of our good reputation as regards trade policy. During the preparations for the WTO ministerial conference in Singapore in December, Norway has put forward a proposal on how the WTO should continue its work on the relationship between trade and core labour standards. Norway's aim is primarily to start a dialogue with the developing countries - a multilateral dialogue. Without this we can make no progress. We consistently emphasize that we are not trying to create a basis for sanctions. This is what we call "the third way": if there are no objections to linking trade with labour standards, then there will be no unilateral measures, but a broad multilateral dialogue. The "third way" is based on non-confrontation and dialogue, not on the use of bilateral or multilateral sanctions. Progress so far suggests that a working group may be appointed in Singapore to continue work on the relationship between trade and labour standards. If this is done, the first stage of a difficult task will be over.

Dialogue, or the ability to make contact across borders, and respect for other people's cultures, for their diversity, their way of being, their sense of identity, and their collective rights, are our most important approach. Today, thanks to the work of the Brundtland Commission on environment and development, it has become more legitimate to examine the social and cultural aspects of economic activity and the code of values underlying long-term economic planning.

In our meetings with people in other parts of the world, we often take with us written and unwritten laws of behaviour, in other words, our culture. But we must not be insensitive to the feelings of third countries in this respect. Western condescension and superciliousness do more harm than good.

Teamwork is needed between the various parties - the authorities, the cultural sector, business and industry, NGOs, the social partners, and research and educational institutions. This is also the reason why our Strategic Plan for Asia is based on three pillars, political dialogue, economic cooperation and cultural exchange, and involves cooperation with cultural and educational institutions and exchanges between students and research fellows.

The focus on the responsibility of individual companies for safeguarding human rights is a recent development, and the business sector is now increasingly aware of its responsibilities in this respect. However, there appears to be some uncertainty as to what these responsibilities mean in terms of a company's practical business operations.

Employers' and employees' organizations are currently attempting to clarify attitudes with respect to these issues. The Norwegian Confederation of Trade Unions has advocated the development of a code of conduct for Norwegian companies, which would emphasize their responsibilities as regards freedom of association, the right to strike, the prohibition of forced labour and the elimination of child labour. The Confederation of Norwegian Business and Industry is drawing up a compendium on human rights and trade which is intended to raise awareness and spread information about these issues among business enterprises. The Confederation is to present this in November, and like the Norwegian Confederation of Trade Unions, it is working closely with the authorities on these issues. A forum where these issues can be discussed with the business sector on a regular basis will be established in the Ministry of Foreign Affairs.

As foreigners, we must show respect for other countries. But this should also take the form of respect for the individual, for the environment, and for fundamental norms for relations between employees and employers.

The Government believes that dialogue, cooperation and trade help to build bridges. However, the dialogue must hold out some promise of success. The main trends in the country concerned must lead in the right direction. We must also expect the Norwegian business sector and organizations to demonstrate attitudes and conduct that we and others find acceptable, both at home and abroad.

Many of the greatest challenges facing us at present require a global approach and common supranational solutions. This is not an easy way to follow, but it is often the only possible way. Our ability to see fresh opportunities and to act across commercial and social divides will determine whether we succeed as a nation in the global marketplace of the future. It is essential that in the long term, anything that bears the slightest suggestion of "Trademark Norway" should stand for quality and a high ethical profile.

Madam President,
If we look at Norway's foreign trade, it is immediately apparent that a very large proportion is with countries in Western Europe and North America. Here, low labour standards are not a serious problem. However, 10 per cent of Norway's foreign trade is with developing countries, mainly countries in South-east Asia. Many Norwegian companies have also become established there. Moreover, the region is rapidly gaining a strong position in the world economy.

We have a number of government measures that make an important contribution to the conditions of competition for Norwegian firms in international markets. The Norwegian Trade Council provides advice and information, the Norwegian Guarantee Institute for Export Credits facilitates financing for exports by providing guarantees, and the Action Programme for Eastern Europe is intended to encourage Norwegian business and industry to participate in the economic reform process in Eastern Europe, to mention only a few examples. The Minister of Development Cooperation will discuss those arrangements designed to draw Norwegian business and industry into the development of the productive sector in developing countries.

All these arrangements have been the subject of broad-based, thorough discussion in the Storting. The recent reforms of the system of incentives in trade and industrial policy have been designed to make the scheme more market-oriented, economically effective and better adapted to the needs of the business sector. The individual institutions have been given more independence as a means of ensuring these developments. All allocations are made on the basis of individual assessment, and within the framework of current Norwegian foreign and trade policy.

It is not a crime for Norwegian companies to become established in new markets or even to make profits, for instance in Asia. This results in wealth creation, employment opportunities and improved welfare in Norway, and it results in development in other countries. Globalization forces us to adopt new ways of thinking and working, to which every actor, including the authorities, business enterprises, and the various organizations, is contributing in his own way.