Cotton fair trade and labour standards: implications for Central Asia

1. Cotton fair trade and labour standards: implications for Central Asia Alisher Ilkhamov Presented to the SOAS conference ”Cotton Sector in Central Asia: economic policy and development challenges”, 3-4 November 2005 (English version)

2. The case of the Uzbek cotton sector • High cost of cotton production: • irrigated agriculture • climate risks • transportation • labour cost • other inputs: seeds, fertilizers; chemicals; fuel, engineering • ginning • taxes • Two policy options: productivity or suppression of labour cost • Implications for governance system: • centralisation, comprehensively controlled • limited subsidies (for irrigation): the state pumps resources from the village: the agro-sector is not the beneficiary of state support but its donor • social and environmental cost is neglected

3. ILO Conventions not met by Uzbekistan • Fundamental Conventions on forced labour (3) • Fundamental Conventions on child labour (2) • Protection of children and young persons (5) • Wages (6) • Occupational safety and health. General provisions(8) • Protection against specific risks(6) • Social security • Social policy • Specific categories of workers (plantation convention, art.12, 26, 43, 62, 63..)

4. Ratifications of the Fundamental human rights Conventions by country (4 core standards)from ILOLEX, 28. 10. 2005 Central Asia http://www.ilo.org/ilolex/english/docs/declworld.htm

5. Methods of encouragement • Pressure from domestic civil society and unions movement • External pressure • The question of sanctions: What is feasible? • Fair trade agenda

6. Two discourses relating to fair trade: • Trade justice: Articulated by trade unions (including those in developing countries) and global civil society networks • Promotes international labour, environment and social standards • Free trade: Reflected in the WTO regulation • Promotes equity between trade partners; normally against unilateral tariffs and trade barriers and subsidies to export. • In both cases the context of the North-South relationship is the key one • North: subsidies, tariffs and quotas • South: corruption, violation of human and workers’ rights

7. Means of promoting fair trade: social activism • Civil society and trade unions initiatives: • Fair trade movement since 1860; • Fair trade organizations and federations • Creation of fair trade labelling: • Max Havelaar (Solidaridad): 1988, Mexican Coffee to The Netherlands • TransFair International (co-founded by EFTA) ; • RUGMARK (Child labour) • FAIRTRADE Mark (The Fairtrade Foundation, UK) • = parts of the standards and certification system operated by Fairtrade Labelling Organisations International (FLO) • Results: FAIRTRADE Mark have more than doubled in the past two years to reach an estimated retail value of £140 m in 2004 • But: • Compare with the UK average weekly retail sales in September (£4.6 billion) (http://www.statistics.gov.uk/cci/nugget.asp?id=256)

8. Means of promoting fair trade: global governance institutions • International institutions and regulations • EU: • In 1994 EP adopts "Resolution on promoting fairness and solidarity in North South trade" . • 1997: EP adopts a "Resolution on Social Labelling" welcoming the initiatives of the NGOs behind the Clean Clothes Campaign and Rugmark and the other fair-trading initiatives. • EU retains trade barriers against cheap agro and textile import • US: from Clinton’s to Bush’s views • ILO: without mechanisms of enforcement • WTO: with the mechanisms, but dominated by developing countries

9. WTO and labour standards • Its main declared function is to ‘ensure that trade flows as smoothly, predictably and freely as possible’. • No mention of fairness in main goals, but fair competition is one of basic principles • Precedents: Articles XX (prison labour) and XXIII of the GATT (dumping). • However, the labour standards issue is rejected as a party of the WTO agenda: • The dispute over the issue since 1st Ministerial Conference in Singapore on 9 -13 December 1996. • Developing countries see as a trojan horse for Western protectionism • They might respond by erecting their own trade barriers • WTO is against using trade as ‘hammer’: ‘free trade’ is untouchable ‘sacred cow’ • What measures then are applicable? • Main focus is on lowering trade barriers and eliminating dumping and subsidies.

10. Removal of subsidies • Cotton: Brazil and 4 West African countries vs US (2003) • 10-12% growth of possible benefit for the South in case of removal of all subsidies to cotton farmers in US and EU (Baffes’ presentation) • But: • Who would benefit from the increase of world prices – the elites or ordinary farmers? • Non compliance with ILO standards is one of the factors leading to the price dumping • Uzbekistan contributes to dumping, but enjoys solidarity from some developing countries (China, Malaysia..)

11. Uzbekistan avoids direct sanctions: shift toward Asian cotton and textile market: export(UzReport.com, 10.10.2005

12. Uzbekistan’s shift toward Asian cotton and textile market: Transportation(UzReport.com, 10.10.2005)

13. Uzbek cotton to re-incarnate in the EU and US markets in the form of Asian textile • Row between EU and China on textile import quotas • EU is under pressure: • Developing countries • US and Canada • EU is split over barriers for Chinese textile: • Retailers’ pros (mainly EU North) • Textile producers’ cons (EU South) • Labour standards as part of the agenda on the EU - China textile deal • China imports Uzbek cotton: that dumps world prices • China doesn’t legally commit to the core labour standards

14. Ratifications of the Fundamental Human Rights Conventions by Countryfrom ILOLEX, 28. 10. 2005 Europe versus Asia http://www.ilo.org/ilolex/english/docs/declworld.htm

15. Policy implications • WTO and ILO ‘impotent’ in promoting their goals unless link their policies with each other • Labour standards and free trade should be considered within one framework. Five point policy suggested: • remove trade barriers, • abolish subsidies, • comply with core labour standards • avoid arbitrariness; • use trade sanctions selectively and in a limited format. • Distinguish between comparatively wealthy (Asia) and poor (Africa) developing countries;