Starting on 30 May, the employers, employees and governments of the world will be gathered for tripartite negotiations at the ILO for two weeks. The general theme of the negotiations is global supply chains which are estimated to account for 60-80% of international trade and more than 20% of jobs globally.
Even if the negotiations do not result in a new convention or other concrete measures, they are extremely important – especially for Danish businesses and their opportunities in the global marketplace. These negotiations will shape the ILO’s – and thereby the UN’s – approach to global supply chains in the coming years, supply chains that Danish businesses use widely and themselves form part of.
Unfortunately, the ILO’s permanent office and the trade unions have taken a very conventional ‘north-south’ stance. This approach is dominated by an image of major Western companies having full control of the entire supply chain and manufacturing conditions – even in the second, third and fourth links of the chain. That is not how things work in reality. But it is on this basis that the trade unions want to establish a convention that requires businesses high up in the supply chain to take responsibility for the enforcement of applicable legislation in businesses lower down in the supply chain in other countries.
A convention on global supply chains would go directly against the UN’s global guidelines for human rights and commerce, unanimously adopted by the UN General Assembly in 2011.
But such a strategy does not just go against an adopted principle. It would also mean a transfer of liability from governments to the business community which may result in a de facto embargo for some countries and thereby hinder economic growth and development. Businesses will simply be afraid of investing, operating, retaining suppliers or otherwise conducting business in countries where they are suddenly made legally responsible for the first, second, third or tenth link in the supply chain and any non-compliance with local laws because the authorities in those countries do not enforce them.
The big question is whether an agreement will be reached at the end of the negotiations. Having participated in day-long meetings and discussions deep within the European headquarters of the UN in Geneva, I am no longer sure that this will happen. The lines have been sharply drawn – and as long as it has not been acknowledged that it is the responsibility of governments to make and enforce laws while businesses are required to comply with them, we will not reach an agreement.
We do not want a world in which the business community has to act as policeman or be limited by only being able to trade with the 14-16% of the countries in the world that have effective law enforcement in place. This will not only damage global development, but have a direct harmful impact on the many workers in developing countries who want to work in factories exporting to consumers around the world.
The fact is that global supply chains have contributed to creating millions of new jobs in developing countries, provided new opportunities, especially for women, higher incomes and improved living standards.
Global supply chains also contribute to building up manufacturing capacity in developing countries. This includes the dissemination of technology and knowledge which, in turn, generates opportunities for industrial development over the longer term. In this way, local businesses are able to move up the value chain, produce higher value and generate greater profits.
But many critics of global supply chains do not look at working conditions compared to local alternatives, but judge them against standards in more developed countries with which they are associated. For example, they see the farmer who takes a job at an exporting factory in Phnom Penh in Cambodia as an example of a victim. He could, however, also be regarded as an example of economic and social progress as he moves from the informal sector into the formal sector with its associated rights and opportunities. The problem is often in the eye of the beholder.