Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - The Social Dimension of Globalisation - the EU's policy contribution on extending the benefits to all
Date: 2004-05-18
Institutions: European Commission
Subjects: EU policy, cooperation policy, economic and social cohesion, globalisation, social development, social impact

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 18.5.2004 
COM(2004) 383 final 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

The Social Dimension of Globalisation - the EU's policy contribution on extending 
the benefits to all 

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1. 

EXECUTIVE SUMMARY  

The process of globalisation has brought significant benefits to many people across the world. 
Higher quality – and higher earning – jobs have been created in parts of the world which have 
previously relied largely on agriculture to maintain their people. 

These positive aspects of globalisation are recognised by the report of the World Commission 
on  the  Social  Dimension  of  Globalisation1  (WCSDG)  published  on  24  February  2004. 
However the report also notes that the benefits of globalisation are not shared equally across 
all  countries  and  groups  and  that,  without  an  effective  system  of  global  governance,  the 
current model of globalisation is generating unbalanced outcomes and is not likely to lead to 
global sustainable development. 

The EU has long pursued policies, both at home and internationally, which seek to ensure that 
economic and social progress go hand in hand. In particular in Lisbon in 2000, the Heads of 
State and Government agreed an integrated strategy for reforms which is intended to lead to 
Europe becoming the most competitive knowledge based society in the world, with more and 
better  jobs  and  increased  social  cohesion,  by  promoting  mutually  reinforcing  policies  to 
address  the  needs  of  competitiveness,  employment,  social  progress  and  environmental 
sustainability.  This  strategy  is  also  the  basis  for  the  EU's  policy  response  to  the  impact  of 
globalisation on businesses, jobs and citizens in Europe.  

The EU's economic and social model, and the Lisbon strategy which translates it into practice, 
cannot  simply  be  transposed  to  other  parts  of  the  world.  Nevertheless,  the  WCSDG  has 
highlighted a number of aspects of the model which may be of interest to the Union's partners. 
This is especially true of the processes involved in the design, implementation and evaluation 
of policies which are essential to the achievement of the balance between economic and social 
objectives.  The  EU  model  places  particular  emphasis,  for  example,  on  solid  institutional 
structures for the management of economic, employment, social and environmental issues and 
the interplay between them, on strong social and civil dialogue and on investment in human 
capital and the quality of employment. 

The EU must also ensure that it exercises its external policies in a way which contributes to 
maximising the benefits of globalisation for all social groups in all its partner countries and 
regions. Its external policies have always had an important social dimension, for example in 
supporting  universal  access  to  basic  social  services  in  the  developing  world.  For  some  time 
now, the EU has also been promoting the effectiveness and coherence of global governance, 
including economic governance, through international institutions, to ensure that trade policy 
and  bilateral  relations  with  regions  and  individual  countries  are  fully  supportive  of  social 
development  and  to  ensure  that  development  and  external  co-operation  contributes  to 
maximise  positive  and  minimise  negative  social  consequences  of  globalisation.  It  also 
encourages the private sector to contribute to these objectives. 

This  Communication  briefly  describes  the  current  range  of  actions  undertaken  in  the 
framework of the Union regarding the social dimension of globalisation and makes proposals 
for  certain  changes.  It  is  intended  to  be  a  first  contribution  to  the  debate  which  has  been 
started  by  the  publication  of  the  WCSDG's  report  and  in  particular  to  the  discussion  on  the 

1 

'A fair globalization: creating opportunities for all', http://www.ilo.org/public/english/wcsdg/  

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follow-up  to  be  held  at  the  International  Labour  Conference  in  Geneva  in  June  2004.  The 
Commission believes that some of WCSDG’s proposals should also be discussed at other fora 
which have responsibility for financial, economic and trade issues. 

2. 

BACKGROUND 

The EU has long been aware of the advantages and risks of greater economic integration at 
world  level,  not  least  based  on  its  own  experience  of  substantial  and  successful  regional 
integration. It has developed policies to promote both economic progress and social cohesion, 
underpinned by its attachment to fundamental rights and freedoms. It has adopted a strategy 
for  sustainable  development  dealing  with  economic,  social  and  environmental  policies  in  a 
mutually reinforcing way2. The EU has also emphasised the need to build the balance between 
economic,  social  and  environmental  imperatives  into  its  external  relations  policies.  It  has 
already initiated and developed relevant policies3 such as on the linkages between trade and 
development, the poverty focus of development cooperation, core labour standards and social 
governance,  CSR,  trade  and  the  environment,  its  commitment  to  multilateralism,  to 
sustainable development and the fight against corruption and to human rights in the world. 

In  response  to  concerns  on  this  issue,  the  World  Commission  on  the  Social  Dimension  of 
Globalisation (WCSDG), was established by the International Labour Organisation (ILO). It 
has delivered on 24 February 2004 an authoritative report which analyses the social impact of 
globalisation.  The  European  Commission  contributed  to  the  establishment  and  work  of  the 
WCSDG  and  indicated  its  willingness  to  contribute  to  its  effective  follow-up4.  The  report 
makes a series of recommendations intended to lead to a better management of globalisation, 
aiming  at  a  fairer  distribution  of  benefits  among  the  peoples  of  the  world  and  a  better 
anticipation of the costs which are often associated with sudden global adjustments. 

The WCSDG's report  covers  a  wide  range of issues which are relevant for both the internal 
and external policies of the EU. It builds on a number of initiatives which exist at global level. 
Overall  it  was  well  received  by  ILO  member  states,  the  EU  and  by  the  international 
organisations  in  the  ILO  Governing  Body  in  March  20045.  However,  if  the  input  of  the 
WCSDG is not to become simply yet another report alongside other initiatives, concrete steps 
are needed to follow up its recommendations. The follow-up of the report will be discussed at 
the annual meeting of the International Labour Conference in June 2004, but the Commission 
believes that some of its proposals should also be discussed in other international fora which 
have responsibility in particular for financial, economic and trade issues. 

The  Commission  believes  that  the  EU  can  and  should  make  an  active  contribution  to 
harnessing globalisation so that it serves social as well as economic goals. There is a growing 
interest, including in the WCSDG report, in the EU approach to economic, employment and 
social  issues  and,  more  generally  in  the  EC  model  of  sustainable  development.  This  is  now 
even  more  relevant  with  EU  enlargement.  The  Commission  is  therefore  taking  this 

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European Council of Göteborg, Presidency Conclusions, June 2001. 
COM(2002)  513  final  of  18.9.2002,  COM(2000)  212  final  of  26.04.2000,  COM(2001)  416  final  of 
18.7.2001, COM(2002) 347 final of 2.7.2002, COM (1996) 54 final of 28.2.1996, COM(2003) 526 final 
of 10.9.2003, COM(2003) 829 final of 23.12.2003, COM(2001) 252 final of 8.5.2001. 
http://www.ilo.org/public/english/wcsdg/consulta/index.htm 
http://www.ilo.org/public/english/standards/relm/gb/docs/gb285/pdf/gb-16.pdf (§42-43) 
http://www.ilo.org/public/english/standards/relm/gb/docs/gb289/pdf/gb-16.pdf 

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opportunity to set out its initial views on some of the issues raised in the WCSDG's report as a 
basis for the forthcoming debate. 

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* 

The impact of globalisation on different societies is a hotly debated topic. These impacts are 
multi-faceted  and  can  be  both  positive  and  negative,  depending  on  timing  and  the  specific 
context  in  each  country.  Associated  notably  with  increased  transport  and  use  of  natural 
resources,  the  mechanisms  by  which  the  increased  flows  of  trade,  capital,  ideas  and  people 
around  the  world  impact  on  economies,  societies  and  the  environment  are  complex  and 
depend  on  domestic  situations,  including  on  whether  appropriate  flanking  measures  are  in 
place. 

Globalisation  is  a  term  that  is  used  in  many  ways,  but  the  principal  underlying  idea  is  the 
progressive  integration  of  economies  and  societies.  It  is  driven  by  new  technologies,  new 
economic relationships and the national and international policies of a wide range of actors, 
including governments, international organisations, business, media, labour and civil society6. 
It  is  a  process  of  integration  which  has  been  underway  since  at  least  the  second  half  of  the 
nineteenth  century,  if  not  before.  The  rate  of  integration  has  recently  been  boosted  by 
technological progress and by policy decisions to reduce barriers to international transactions. 
It has led, in particular, to the increasing international division of labour. 

Although the WCSDG report has a tendency to focus on the negative impacts of globalisation, 
overall its impact has been positive, though in some cases the benefits have not been sustained 
in the face of particular challenges. In the immediate post war period, the main beneficiaries 
of globalisation were the industrialised countries, where real income per capita has more than 
tripled  over  the  second  half  of  the  twentieth  century.  More  recently,  a  study  by  the  World 
Bank7 shows that the opening of markets and economic integration have also contributed to 
substantial  economic  progress  for  developing  countries  that  have  managed  to  enter  global 
manufacture and service markets. In the latest wave of globalisation, countries such as China, 
India and Mexico have doubled their ratio of trade to income, with their exports being made 
up increasingly of finished products and services, not just raw materials8. Such countries have 
on average increased their annual per capita economic growth from 1% in the 1960s to 3% in 
the  1970s  and  5%  in  the  1990s.  With  such  growth  rates,  often  above  those  of  OECD 
countries, these developing countries are now showing signs of convergence. 

Largely as a result of the strong economic growth in Asia, global poverty is falling and the 
world  is  on  target  to  reach  the  Millennium  Development  Goal  of  halving  poverty  between 
1990  and  20159.  In  China  alone,  200  million  people  have  been  lifted  out  of  poverty  since 
1990. Other indicators support this positive view: while life expectancy increased by about 10 
years  in  industrialised  countries  between  1950  and  1999,  it  increased  by  nearly  20  years  in 
developing countries (and by nearly 30 years in India and China)10. 

However, these positive impacts have not been universal. Countries which are home to about 

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Definition used by the WCSDG: http://www.ilo.org/public/english/wcsdg/globali/index.htm  
Globalization, Growth and Poverty – A World Bank Policy Research Report, World Bank and Oxford 
University Press, 2002. 
In India, for example, IT exports now account for nearly 40% of export earnings. 
World Development Report 2004, World Bank. 
Angus Maddison, The World Economy: A Millennial Perspective, OECD 2001. 

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two  billion  people  are  not  participating  strongly  in  globalisation  and  risk  remaining 
marginalised  from  the  world  economy.  For  instance  in  Sub-Saharan  Africa  the  number  of 
people living on less than a dollar per day has actually increased by 30 % over the last decade. 
Life expectancy has gone down, and the prospects for achieving the Millennium Development 
Goals (MDGs) are not good. Improving the economic situation and living standards in such 
regions  is  one  of  the  major  challenges  for  the  global  economy.  In  this  context,  the 
Commission  welcomes  the  emphasis  which  the  WCSDG  puts  on  domestic  policies  and 
believes  that  getting  policy  right  at  home  is  vital,  not  only  to  reaping  the  benefits  of  global 
integration,  but  also  to  stimulating  the  leverage  of  domestic  investment,  which  is  often 
underdeveloped.  

Poverty remains a problem even in those countries which have seen rapid growth. Economic 
integration  can  have  a  significant  positive  effect  on  poverty,  but  securing  such  positive 
benefits  requires  a  reduction  in  inequalities  and  effective  social  policies.  Core  labour 
standards  (CLS)11  and  tripartite  and  bipartite  social  dialogue,  to  give  effect  to  such  policies 
are  seen  as  a  key  part  of  the  framework  for  ensuring  a  fair  globalisation,  while  recognising 
that they are a baseline. The final objective should be the creation of dynamic social progress 
with a view to promoting decent work for all12. The EU policy that labour rights should not be 
used for protectionist reasons and its rejection of any unilateral sanctions-based approach is in 
line with the position of the WCSDG13.  

All countries need to ensure a domestic environment which is supportive to trade, investment 
and social equity. Open and transparent administration is a key part of this environment. For 
many countries regional integration offers an opportunity to expand economies of scale and 
stimulate  competition,  as  well  as  solidarity  amongst  peers,  increasing  efficiency,  but  also 
increasing the credibility of reform, providing clarity and consistency for potential investors. 
The EU supports developing countries in their efforts in these areas. 

The  WCSDG  rightly  observes,  that  the  crucial  efficiency  gains  that  trade  can  stimulate  in 
developing countries have been limited by lingering protection in the very sectors where they 
often have comparative advantage – notably agriculture, processed commodities and labour-
intensive goods. This is the case both in developing and developed markets. Although in the 
latter these barriers are sometimes offset by preferential access agreements, such as the EU’s 
Everything  But  Arms  (EBA)  initiative  for  LDCs,  such  high  levels  of  market  access  are  the 
exception  rather  than  the  rule.  If  the  global  division  of  labour  is  to  be  made  to  work  more 
effectively for development, such barriers need to be addressed. 

In addition, as the WCSDG underlines, it is undeniable that adjustment costs co-exist with the 
efficiency gains from trade. The gains of market opening typically exceed the costs. However 
the  costs  tend  to  be  more  concentrated  amongst  those  sections  of  the  population  that  had 
benefited from past protection, while the benefits are spread more diffusely and are thus less 
evident. Unless the fruits of integration with the world economy can be more evenly spread 

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Core  labour  standards  (CLS)  are  internationally  agreed  in  the  ILO  and  cover:  elimination  of 
discrimination  in  employment,  elimination  of  forced  labour,  abolition  of  child  labour,  freedom  of 
association and the right to collective bargaining. 
The  decent  work  agenda  covers  the  strategic  objective  of  the  ILO  and  includes  workers  rights, 
employment,  social  dialogue  and  social  protection.  The  World  Commission  supports  the  decent  work 
agenda (§ 502-510 and annexe 1). Decent work promotion is also included in the cooperation between 
the European Commission and the ILO, Exchange of letters of 14.05.2001, OJ, C 165, p. 23. 
General Affairs Council Conclusions of 21.07.2003; WCSDG report § 421. 

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between and within countries, support for globalisation will remain fragile. 

Coping  with  economic  and  industrial  restructuring  is  not  a  straightforward  task  and  the 
transitional period can be very long. Anticipation is important. Workers need to be supported 
so that they can seize the opportunities that globalisation offers and cope with future changes. 
Adequate supportive policies are necessary in both the North and the South to anticipate the 
long  term  and  mitigate  the  short  term  negative  impacts  on  vulnerable  regions,  sectors  and 
workers. Governments must ensure effective accompanying policies, commensurate with their 
level  of  development,  which  encourage  job  creation  through  business  start  ups,  provide 
retraining and pursue active labour market policies and adequate safety nets. In addition they 
need  to  maximise  the  contribution  of  migrant  workers  to  economic  growth  and  secure  their 
fair share of welfare gains by ensuring their effective integration into society. 

The  WCSDG  highlights  that  in  some  countries  globalisation  has  exacerbated  gender 
imbalances. Deep-rooted and long-standing gender inequalities often result in the social costs 
of globalisation falling disproportionately on women. However, as the WCSDG also indicates, 
these  imbalances  depend  largely  on  the  level  of  gender  equality  prevailing  in  the  norms, 
institutions  and  policies  of  a  country  when  its  integration  in  the  global  economy  takes 
places14. Gender equality is a fundamental objective of EU internal and external policies and 
an essential element of the internationally agreed core labour standards (CLS). 

3. 

THE RELEVANCE OF THE EU'S ECONOMIC AND SOCIAL MODEL 

As  recognised  by  the  WCSDG's  report,  the  EU  is  a  very  particular  model  of  political, 
economic and social integration. While preserving distinct national identities for its Member 
States, the EU has created a single market with free movement of goods, services, capital and 
people.  Economic  and  monetary  union  has  pushed  the  process  further  still,  opening  up  new 
opportunities for producers of goods, providers of services and for consumers. In doing so, it 
has contributed to improving living conditions of its citizens and in particular for those in the 
least developed Member States. The GDP per capita of Spain and Portugal has increased from 
respectively 71% and 54% of the EU average in 1985, when they joined the EU, to 86% and 
71% in 2002, while that of Ireland has jumped from 60% in 1973 to over 125% in 2002. 

There has long been a strong social dimension to the economic integration of Europe. At the 
time  of  the  common  market,  the  social  dimension  focused  principally  on  workers'  rights, 
gender  equality  and  social  and  economic  cohesion  through  Structural  Funds.  But,  with 
increasing integration, it has expanded to encompass a broader range of objectives, including 
full  employment  and  higher  quality  jobs,  the  quality  of  education  and  training  systems, 
adequate  and  sustainable  social  protection,  the  promotion  of  social  dialogue  and  the  fight 
against  discrimination  and  social  exclusion.  These  objectives  are  reflected  in  the  European 
treaties  and  the  conclusions  of  Heads  of  State  and  Government  of  EU  Member  States  at 
various meetings of the European Council. In particular, the Heads of State and Government 
agreed  in  Lisbon  in  2000  an  integrated  strategy  for  reforms  which  is  intended  to  lead  to 
Europe becoming the most competitive knowledge based society in the world, with more and 
better  jobs  and  increased  social  cohesion,  by  promoting  mutually  reinforcing  policies  to 
address  the  needs  of  competitiveness,  employment,  social  progress  and  environmental 

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WCSDG report, § 214-217. 

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protection.  This  strategy  is  also  the  basis  for  the  EU's  policy  response  to  the  impact  of 
globalisation on businesses, jobs and citizens in Europe. 

At the subsequent meeting in Barcelona in 2002, the European Council defined the European 
social  model  as  being  based  on  good  economic  performance,  on  a  high  level  of  social 
protection and life long learning and on social dialogue between representatives of employers 
and  employees15.  European  policies  promote  employment  growth,  including  by  investing  in 
education,  skills  and  mobility,  and  contribute  to  reducing  the  number  of  people  at  risk  of 
poverty and to the sustainability of social protection systems. The model emphasises both the 
need to involve workers in the changes which affect them, and especially in the management 
of corporate restructuring, and to enhance the quality of work. 

The  report  of  the  WCSDG  identifies  a  number  of  elements  of  the  EU  model  as  having 
contributed  particularly  to  its  success  in  improving  living  and  working  conditions:  a  strong 
legal  framework;  openness  to  the  world  economy  and  an  effective  market  economy; 
supportive  national  social  protection  systems  and  common  minimum  standards  for 
employment;  involvement  of  the  stakeholders  through  the  European  social  dialogue;  gender 
equality; and, more widely, respect for human rights and the rule of law, democracy and the 
strengthening of democratic supervision through the European Parliament.  

The EU's economic and social model, and the Lisbon strategy which translate it into practice, 
cannot  simply  be  transposed  to  other  parts  of  the  world.  Nevertheless,  the  WCSDG  has 
highlighted a number of aspects of the model which may be of interest to the EU's partners, 
especially  in  terms  of  the  processes  which  are  essential  to  the  achievement  of  the  balance 
between  all  the  objectives  at  stake.  The  EU  model  places  particular  emphasis  on  solid 
institutional structures for the management of economic, social and environmental issues and 
the  interplay  between  them,  on  effective  public  services  and  services  of  general  interest,  on 
strong  social  and  civil  dialogue,  on  investment  in  human  capital  and  on  the  quality  of 
employment. 

Practical  experience  of  the  relevance  of  the  European  economic  and  social  model  for 
countries  in  the  process  of  economic  transition  has  been  seen  recently  in  the  context  of  the 
Union's  latest  enlargement.  The  ongoing  transformation  of  the  economies  of  the  eight 
countries  of  Central  and  Eastern  Europe,  which  joined  the  Union  on  1  May  2004  after  less 
than 15 years of experience of the market economy, is testament to the contribution which the 
European model can make to deal with the social impact on workers and their families. The 
Commission  has  in  particular  emphasised  the  need  to  strengthen  the  capacity  of  public 
authorities, social partners and civil society to better anticipate the consequences of economic 
changes, to invest in education and in skills of the workforce and to provide sustainable social 
protection systems to cushion the shock for individuals. 

4. 

MANAGING THE CONSEQUENCES OF GLOBALISATION IN THE EU  

Globalisation  increases  the  pressure  on  economic  actors  in  the  EU  to  remain  at  the  cutting 
edge of competitiveness. As highlighted by the WCSDG, the social impact of adjustment also 
affects industrial economies. For trade liberalisation to succeed and have maximum economic 
impact, mechanisms must be provided to cope with the adjustment costs, in particular those 

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Presidency Conclusions, European Council, Barcelona, 15 and 16 March 2002. 

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associated  with  restructuring.  Managing  change  will  help  to  address  the  needs  of  those 
negatively  affected  by  market  opening,  ensuring  a  more  equal  spread  of  the  gains  of 
liberalisation16. It requires a coherent and forward looking approach with full involvement of 
and  commitment  by  all  public  and  private  stakeholders.  The  WCSDG  also  underlines  the 
importance of regional integration in helping countries to manage globalisation and refers to 
the EU policies and experiences17.  

Overall  economic  gains  for 
the  EU  from  globalisation  are  undoubtedly  positive. 
Restructuring,  including  relocations,  not  only  affects  low-  skilled  workers  and  the 
manufacturing industry but can now increasingly be found in the service sector, including in 
highly  skilled  jobs  in  knowledge  intensive  business  services.  The  economies  of  the  New 
Member States and in particular those from Central and Eastern European Countries (CEEC) 
have been undergoing in-depth restructuring for more than a decade now18 as a result of the 
transition to a market economy. This has led to a substantial shift of employment between the 
three  main  sectors  (agriculture,  industry  and  services)  and  this  process  is  still  ongoing. 
Restructuring  within  sectors  as  part  of  modernisation  following  the  introduction  of  new 
technologies  or  the  emergence  of  new  competitors  is  present  in  both  existing  and  new 
Member States. 

To maintain Europe's competitiveness, it is necessary to invest heavily in human resources at 
all ages. This is even more necessary in a context of an ageing society, which makes the use 
of  all  potential  labour  essential.  The  Lisbon  strategy,  and  in  particular  the  European 
Employment Strategy, encourages public authorities, companies and the social partners at all 
levels to promote competitiveness by increasing investment in the skills of the workforce and 
by  making  the  most  effective  use  of  information  and  communication  technologies.  All 
stakeholders are required to anticipate, trigger and absorb change.  

The  EU  also  invests  heavily  in  human  capital  through  the  Structural  Funds  and  this 
contributes  significantly  to  economic  and  social  cohesion  across  the  Union.  However  these 
resources  could  be  better  targeted  at  addressing  challenges  posed  by  globalisation,  such  as 
promoting  the  adaptability  and  employability  of  people  and  enterprises  and  disseminating 
research and innovation more evenly throughout Europe. The European Social Fund (ESF) in 
particular  should  act  as  a  catalyst  for  national  and  regional  investments  to  contribute  to 
employment and life long learning, to increased quality and productivity at work and to social 
inclusion.  The  Community  initiative  in  the  field  of  human  resources  known  as  ‘EQUAL’ 
promotes and tests new means of tackling all forms of discrimination and inequalities within the 
labour  market.  It  is  currently  dealing  with  issues  such  as  age  management  and  lifelong 
learning, business creation and the social economy, a better integration into the labour market 
of less favoured groups such as people with disabilities, migrants and ethnic minorities, and 
reconciling family and professional life.19 Community cooperation in the fields of education 
and training also contributes significantly to the Lisbon Strategy goals, including through its 
programmes (Socrates, Leonardo da Vinci, Youth).  

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WCSDG report, § 173, 234, 278-289, 369-379 and annexe 1. 
WCSDG report, § 313-334. 
Employment  in  Europe  2002,  chapter  5  and  Employment  in  Europe  2003;  Structural  change, 
convergence  and  specialization  in  the  EU  Accession  Countries,  ed.  by  M.  Landesmann,  WIIW 
(October 2003). 
http://europa.eu.int/comm/employment_social/equal/index_en.html 

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As  highlighted  in  the  Commission's  Report  on  cohesion20  and  the  Communication  on 
financial  perspectives21,  the  Structural  funds  should  be  used  to  better  address  economic  and 
social restructuring. 

Anticipating  change,  managing  restructuring  and  ensuring  the  right  balance  between 
flexibility and security requires both effective bipartite social dialogue and solid partnerships 
between  employers,  trade  unions  and  public  authorities.  At  the  Tripartite  Social  Summit  for 
Growth  and  Employment  on  25  March  2004,  all  the  partners  affirmed  their  commitment  to 
renewing  a  European  Partnership  for  Change,  and  agreed  to  review  the  progress  made  in  the 
various  levels  of  partnership  at  subsequent  Tripartite  Social  Summits.  Partnership  will  be  of 
particular  importance  in  order  to  manage  the  impact  of  continuing  restructuring  in  the  new 
Member States, where the capacity of both employers' organisations and trade unions to engage 
in constructive bipartite social dialogue requires further strengthening. This is crucial if they are 
to reach agreements on the measures which will be required in order to alleviate and manage the 
potentially negative social consequences of restructuring. 

Strong  social  partner  organisations  can  make  significant  contributions  to  both  the  quality  of 
employment and to  maintaining  the  competitiveness  of companies  by  securing  the  motivation, 
loyalty  creativity  and  productivity  of  employees.  The  European  treaty  encourages  dialogue 
between social partners at cross-industry and sectoral level and the Commission has requested 
them to make better use of their European bargaining area22. Cross-sector and sectoral social 
partners  have  included  restructuring  and  managing  change  in  their  respective  work 
programmes and ongoing activities and include issues such as life long learning and quality at 
work.  The  Commission  has  invited  them  to  discuss  the  initiatives  on  restructuring  in  more 
detail. The European Monitoring Centre on Change established in October 2001 will provide 
social  partners  with  tools  to  better  understand,  anticipate  and  manage  change  and  is  now 
enlarging its activities to the New Member States. 

EU legislation sets minimum requirements which all Member and all companies must observe 
when  contemplating  large-scale  job  losses  or  preparing  other  decisions  likely  to  affect 
workers.  The  most  recent  texts  clearly  promote  upstream  worker  involvement,  notably  on 
strategic  issues  and  on  the  foreseeable  evolution  of  employment  within  companies.  In 
addition  more  and  more  individual  companies  are  undertaking  socially  responsible 
approaches to the management of change. The EU encourages such initiatives. EU legislation 
ensures  minimum  standards  for  occupational  health  and  safety  and  for  working  conditions. 
Social  partners  are  closely  involved  in  this  standard  setting  process.  CLS  such  as  non-
discrimination in employment and equal opportunities for men and women are guaranteed by 
EU  legislation.  Freedom  of  association  and  collective  bargaining  are  enshrined  in  the 
European Charter of Fundamental Rights.  

To  facilitate  a  positive  attitude  to  change  among  businesses  and  workers,  the  safeguards 
provided  by  social  protection  systems  must  be  made  sustainable,  which  in  many  cases  will 
imply  reform  and  modernisation.  The  Union  supports  the  reform  process  through  an  open 
method of co-ordination, aimed at spreading best practice and achieving greater convergence 
towards  the  main  EU  goals:  Member  States  agree  common  objectives  in  relation  to  social 
adequacy  and  financial  sustainability  of  their  social  protection  systems  and  exchange  best 

20 
21 
22 

COM(2004) 107 final of 18.2.2004. 
COM(2004) 101 final of 10.2.2004. 
COM(2002) 341 final of 26.6.2002. 

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practice  and  engage  in  peer  review.  Following  the  successful  implementation  of  the  open 
method  of  co-ordination  in  the  area  of  pensions,  the  Commission  has  recently  launched  a 
proposal  for  a  new  process  of  co-ordination  in  the  field  of  health  care.  The  Lisbon  strategy 
also  encourages  an  institutional  and  regulatory  environment  conducive  to  investment  in 
research  and  innovation  so  that  Europe  remains  an  attractive  business  location.  The 
Commission believes that the Union should promote further clustering of activities (R&D and 
production  sites).  Equally,  effective  public  services  and  services  of  general  interest  are 
important  both  for  promoting  competitiveness  and  social  inclusion.  The  EU  also  supports 
local development and the WCSDG highlights the employment and environmental potential of 
local initiatives23.  

Sustainability  Impact  Assessments  (SIAs)  of  trade  liberalisation  negotiations  should  help  to 
better assess the internal impacts of liberalisation on the EU, and in particular, on the weakest 
EU  regions  and  industries  and  better  identify  linkages  between  various  policies24.  SIAs  and 
the integration of their results within the EU’s policies should enable it to better address the 
internal  and  external  social,  environmental  and  economic  challenges  of  liberalisation.  The 
establishment of a steering committee including social partners and civil society will ensure a 
substantial social dimension within the SIAs.  

5. 

HARNESSING GLOBALISATION - EU ACTION  TO PROMOTE THE SOCIAL DIMENSION 
OF GLOBALISATION  

The WCSDG's report is relevant to a number of the EU's external policies. 

5.1. 

The social dimension of European bilateral and regional relations  

The European Community's relations with third countries encompass a large number of issues 
addressed in the report of the WCSDG, in particular good governance, the rule of law, human 
rights  and  democratisation,  as  well  as  social  development  as  the  necessary  corollary  of 
economic development to ensure sustainable progress. 

5.1.1.  Bilateral and regional agreements 

The EU has negotiated Agreements with virtually all countries and many regional groupings 
of  the  world.  Their  main  objectives  are  to  promote  stability  and  sustainable  economic  and 
social  development  worldwide.  To  this  end,  EU  bilateral  and  regional  Agreements  set  up 
institutional arrangements for political and technical dialogues and put in place a framework 
for, in particular, economic, institutional and social cooperation. Most of the Agreements also 
include a social chapter, which, for some of them, still needs to be fully exploited. 

Respect  for  democratic  principles,  human  rights  and  the  rule  of  law  have  been  included  as 
essential  elements  of  all  Agreements  with  third  countries  or  regional  groupings  since  1992. 
Civil  society  and  the  social  partners  are  also  part  of  the  process.  Dialogue  and  consultation 
with  local  civil  society  and  between  partner  countries  authorities  and  local  civil  society  is 
promoted. 

23 
24 

WCSDG report, § 290-312. 
Since 1999, SIA has been generalised to all major trade negotiations and is now enshrined in a broader 
commitment to Impact Assessment, COM(2002) 276 final. 

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All  bilateral  negotiations  provide  the  opportunity  for  the  Commission  to  strengthen  the 
sustainable  development  dimension  of  its  Agreements  and  translate  its  policy  commitments 
into concrete action. Therefore it is important that existing provisions on CLS, such as art. 50 
of Cotonou and other Agreements, are effectively implemented. 

The Commission is also committed to carrying out Sustainability Impact Assessments (SIAs) 
of bilateral negotiations. These will assess, inter alia, the impacts on social development in the 
EU  and  its  partner  countries,  using  a  broad  set  of  indicators  and  involving  in  a  wide 
consultation stakeholders, such as private sector associations, trade unions and civil society at 
large.  

The  EU-ACP  negotiations  of  Economic  Partnership  Agreements  (EPAs)25  were  launched  in 
September 2002. Social aspects, such as poverty, employment or south-south migration, are 
key  elements  in  the  development  dimension  of  the  EPA  talks.  The  EC  has  continued  to 
include specific provisions on CLS in bilateral agreements, following the Cotonou example. 
The 2002 Association Agreement with Chile, for example, includes a comprehensive title on 
social  cooperation26.  Most  recently,  the  blueprint  for  the  future  EU  –  Canada  Trade  and 
Investment  Enhancement  Agreement  (March  2004)  establishes  a  dialogue  on  sustainable 
development,  including  its  social  dimension.  In  ongoing  or  future  bilateral  or  regional 
negotiations, the Commission intends to pursue its efforts to put sustainable development at 
the heart of these agreements.  

The Commission has also a long standing cooperation in the field of employment and social 
affairs with Japan and the US and will envisage to extending this to Canada as well as China 
and possibly to other emerging economies.  

Bilateral relations could also involve positive incentives for products complying with certain 
social or/and environmental standards. They also offer the opportunity to better address policy 
coherence,  in  particular  between  trade  negotiations,  implementation,  SIAs  and  technical 
assistance,  through  optimising  the  allocation  of  aid  to  areas  where  adjustment  costs  are  the 
highest. Another potential development relates to the setting up of joint processes to build a 
mutual partnership  on sustainable development. The EC will explore new joint mechanisms 
within bilateral Agreements to discuss and monitor relevant aspects for the social dimension 
of  globalisation  in  which  international  organisations  (such  as  the  ILO)  would  be  invited  to 
participate.  One  possibility  is  the  creation  of  joint  bilateral  “Observatories”  to  monitor 
developments  and  provide  a  forum  for  exchanges  of  views  between  governments,  the 
European  Parliament,  the  social  partners  and  civil  society  at  large,  while  fully  involving 
international organisations and bodies. 

5.1.2.  Political dialogue at regional level 

The  European  Community  has  also  adopted  strong  relations  at  regional  level  and  has 
consistently supported regional integration efforts and processes in other  parts of the  world. 
Regional  integration  is  a  useful  step  towards  better  integration  in  the  world  economy  and 
should  help  these  countries  and  regions  to  maximise  the  benefits  of  globalisation.  In  its 

25 

26 

EPAs  are  an  ambitious  approach  to  supporting  development  through  trade  and  integration.  They  will 
enter into force from 2008. 
The parties commit to giving priority to the creation of employment and respect for fundamental social 
rights and to co-operating in a number of measures related to poverty reduction, the fight against social 
exclusion, modernising labour relations and other related areas. 

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relations  with  the  Balkans  for  example,  the  EU  has  put  a  strong  emphasis  on  regional 
cooperation  and  integration  to  allow  greater  social  economic  and  political  stability  and  as  a 
first step towards further integration with the EU. 

Furthermore,  the  EU  has  developed  a  series  of  political  dialogues  at  regional  level  like  the 
Asia-Europe Meeting (ASEM) process or the EU-Latin America and Caribbean Summits, at 
Heads  of  States  level,  while  political  relations  with  78  ACP  countries  are  governed  by  the 
Cotonou  Agreement,  which  foresees  a  series  of  instruments  and  institutions  to  promote 
political  dialogue.  There  is  also  a  regular  political  dialogue  with  ECOWAS,  SADC  and  the 
African Union. These high level dialogues offer opportunities to discuss the challenges linked 
to globalisation and to try to define joint responses. In the context of ASEM, European and 
Asian  leaders  are  committed  to  addressing  global  issues  of  common  concern  including  the 
impact of globalisation, the management of migratory flows, the reduction of barriers to trade 
and investment, financial and social policy reform and environmental issues.  

Recent  developments  in  Latin  America  are  a  good  example  of  an  increased  focus  on  social 
issues and the social dimension of globalisation. Social cohesion will be the main topic of the 
EU-Latin  America  and  Caribbean  Summit  in  Guadalajara  in  May  2004.  In  this  context,  the 
Commission  has  proposed  that  the  Heads  of  State  and  Government  of  both  regions  take 
concrete  decisions  to:  (a)  encourage  Latin  American  countries  to  adopt  sound  and  efficient 
policies  to  increase  social  cohesion  by  reducing  poverty,  inequalities  and  exclusion  in  the 
areas  of  democratic  governance,  social  policies,  public  finance  and  fiscal  policy;  (b) 
encourage the international community, including and in particular the International financial 
Institutions  (IFIs),  to  support  these  measures  and  to  ensure  that  reform  programmes  are 
carefully  screened  for  their  impact  on  social  cohesion  and  social  stability;  and  (c)  intensify 
cooperation between the EU and Latin America in the field of social cohesion. This approach 
is  in  line  with  the  recommendations  and  views  of  the  WCSDG  on  regional  integration  as  a 
stepping stone towards a fairer globalisation27.  

5.1.3.  Neighbourhood policy 

The  “European  Neighbourhood  Policy”,  aims  at  enhancing  relations  with  the  Eastern  and 
Southern  neighbouring  countries  of  the  Union  following  enlargement.  The  ultimate  aim  of 
this  initiative  is  to  create  an  area  of  stability  and  prosperity  based  on  shared  values  and 
common  interests.  It  will  assist  the  partner  countries  in  carrying  out  political  and  economic 
reforms while strengthening dialogue and cooperation with them in the social field.  

Cooperation  on  the  social  dimension  will  cover  in  particular  regional  development, 
employment, social policy and structural reforms. In terms of regional development, the EU 
will encourage partner Governments’ programmes to foster decentralisation, reduce regional 
disparities,  create  employment  and  promote  core  labour  standards  and  social  dialogue. 
Policies  favouring  poverty  reduction  and  the  improvement  of  national  welfare  systems  will 
also  be  supported.  The  EU  will  also  encourage  partner  governments  to  enhance  the 
effectiveness  of  social  assistance,  to  implement  strategies  to  boost  economic  growth  and  to 
support the development of small  and  medium sized enterprises, as well as to address child 
poverty and ensure free access for both boys and girls to primary and secondary education, in 
particular in the countryside. 

27 

WCSDG report, §327-331and annexe 1, national governance, n° 8. 

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5.1.4.  Promoting human rights and democratisation in third countries 

The  process  of  globalisation  is  a  potential  force  for  freedom  and  justice  as  well  as  for 
prosperity.  The  Commission’s  Communication  on  the  EU’s  role  in  promoting  human  rights 
and  democratisation  in  third  countries28  shows  how  the  Union  contributes  to  making 
globalisation  a  fairer  and  more  inclusive  process.  The  mainstreaming  of  human  rights  and 
democratisation issues in all EU policies is complemented by financial support to activities of 
civil society and international organisations in third countries through the European Initiative 
for Democracy and Human Rights (EIDHR). There is a strong link between good governance, 
including  the  fight  against  corruption,  the  rule  of  law,  the  protection  of  human  rights  and 
fundamental  freedoms  and  the  quality  of  justice29.  An  adequate  and  properly  enforced  legal 
framework guarantees the protection of workers’ and citizens' rights and is also key to social 
protection  for  citizens  in  general  and  for  workers  in  particular.  It  enables  the  promotion  of 
decent work, the fight against illegal work as well as the exploitation of certain categories of 
people like women and children who are more exposed to trafficking and to low wages and 
unemployment or abuses such as moral and sexual harassment.  

5.1.5.  Migration 

Migration is an important and sensitive issue in the discussion on globalisation. It has to be 
addressed  in  all  its  aspects:  not  only  the  South-North  migration  but  also  South-South 
migration, its human aspects including basic rights, the protection and integration of migrants 
and  its  economic  and  social  components  in  all  their  variety  including  remittances  and  brain 
drain/gain.  It  is  necessary  to  further  develop  bi-  and  multi-lateral  dialogues  on  this 
phenomenon  and  to  take  account  of  its  security  implications.  The  Union  is  continuing  to 
develop a set of rules that will govern the EU’s approach towards migration. For some years 
now,  migration  issues  have  been  part  of  the  Co-operation  and  Association  Agreements 
concluded with third countries. The WCSDG recommends the establishment of a multilateral 
framework for the cross- border movement of people and proposes different actions including 
at regional level30.  

5.2. 

Development and external cooperation  

5.2.1.  Millennium Development Goals  

The  EU  has  committed  itself  to  focus  its  international  development  assistance  on  helping 
developing countries to achieve the Millennium  Development  Goals  (MDG's).  The  MDG’s, 
together with the World Summit on Sustainable Development Plan of Implementation agreed 
upon  in  Johannesburg,  provide  an  ambitious  agenda  for  reducing  poverty  and  supporting 
sustainable  development.  The  WCSDG  highlights  the  importance  of  MDG's  as  a  first  step 
towards  a  socio-economic  'floor'  for  the  global  economy  and  calls  for  greater  efforts  to 
mobilise resources31.  

Against  this  background  the  EC  will  focus  on  delivering  on  its  international  commitments, 
with  clear  targets  on  poverty,  education,  health,  gender  and  environment.  The  specific 

28 
29 
30 
31 

COM(2001) 252 final of 8 May 2001. 
Communication on a comprehensive policy against corruption, COM (2003) 317 final of 28.5.2003. 
WCSDG report, §428-446 and annexe 1, labour in the global economy, n° 2 and 3. 
WCSDG report, § 21, 450-481, annexe 1 on better international policies. 

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objectives and actions agreed in Monterrey32 and Johannesburg will set the pace and direction 
of  this  work.  As  a  precondition  to  achieve  these  objectives  EU  policy  coherence  shall  be 
strengthened.  Continued  attention  will  be  given  to  the  need  to  ensure  that  domestic  and 
external  EU  policies  are  conducive  to  the  agreed  international  commitments  and  do  not 
undermine  the  objectives  of  EC  development  cooperation.  The  implications  of  other  EU 
policies  (e.g.  trade,  agricultural  and  fisheries  policy,  migration  policy,  policies  on 
environment, food safety regulations, research, information and communication technologies; 
EU security strategy, fight against drugs, money laundering, human trafficking, international 
terrorism) on developing countries will be continuously assessed.  

5.2.2.  External cooperation  

Much  of  the  responsibility  for  social  development  lies  with  partner  countries  themselves. 
They must ensure that their domestic policies respect human rights and fundamental freedoms 
and  the  rule  of  law  and  ensure  transparent  and  accountable  governance.  They  should  also 
integrate  trade  into  national  development  strategies  and  secure  a  better  distribution  of  the 
benefits of integration with the global economy. This requires: a) institutional and regulatory 
reforms, including agrarian and fiscal reforms, which will lead to sustainable formal private 
sector  job  creation  and  effective  labour  markets;  b)  improvement  of  an  equitable  access  to 
social  services,  notably  in  health  and  education;  c)  development  or  strengthening  of 
redistribution mechanisms, including social protection schemes; and d) better involvement of 
non-state actors, respect for CLS and the promotion of social dialogue. 

The  international  community  has  a  responsibility  to  promote  these  objectives.  The  EU 
supports  the  uptake  of  these  policies,  in  particular  through  its  regional  and  bilateral  support 
mechanisms  and  under  national  cooperation  programmes  with  partner  countries.  The  EC 
approach  to  the  social  dimension  of  external  aid  -  in  dialogue  with  and  support  to  partner 
countries  -  is  considered  part  of  the  democratic  and  stabilisation  process  and  a  necessity  to 
secure  a  minimal  level  of  acceptance  of  and  support  for  the  important  economic  and  social 
transformations partner countries are facing. It contributes to absorbing the shock of the social 
consequences of transition and thus to a more sustainable business and trade environment. To 
better  assess  the  social  consequences  of  globalisation  and  better  target  its  external  aid 
interventions, the European Community intends to promote the mainstreaming of this social 
dimension,  in  particular  in  above  mentioned  areas,  at  the  programming  and  implementation 
stages of its programmes and projects. 

The  Asian  crisis  and  the  impact  of  reforms  undertaken  by  countries  in  transition,  show  the 
importance  of  social  protection  schemes  and  appropriate  redistribution  mechanisms  to 
cushion the social impact of crisis and transition. These practices and social schemes have to 
be developed on a sustainable, institutional basis. Experience in Latin America in dealing with 
social instability and political unrest shows the importance of an operational social dialogue.  

Special  attention  should  be  given  to  evaluating  the  interaction  between  globalisation  and 
gender  equality.  In  this  respect,  the  EU  strongly  promotes  gender  mainstreaming  in  its  co-
operation policy. 

32 

Commission  communication,  COM(2004)  150  final,  5.3.2004,  Translating  the  Monterrey  consensus 
into practice: the contribution of the EU. 

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Trade  reforms  often  involve  transitory  costs  for  certain  groups  of  the  population  who  need 
support to adapt to the new context. The IMF has announced a trade integration mechanism to 
support  countries  which  suffer  balance  of  payments  difficulties  due  to  trade  policy  changes 
such as the removal of MFA quotas. However the international community needs to address 
the issue of adjustment costs more systematically if potential negative social impacts are to be 
avoided. The EU is progressively developing support for trade-related adjustment as part of a 
coherent  development  strategy.  This  would  involve  support  at  three  levels:  a)  building  up 
adequate  domestic  institutional  capacity  to  support  the  policy  reform  measures  required, 
including  the  reform  of  fiscal  systems  to  help  cushion  the  reduction  in  government  revenue 
due  to  declining  receipts  of  import  duties;  b)  programmes  to  anticipate  adjustment  needs 
aimed at ensuring a more equitable spread of gains and smoothing the transfer of productive 
resources from previously protected sectors to those with the highest comparative advantage 
and  c)  accompanying  programmes  for  productive  capacity  development  to  ensure  that  the 
opportunities offered by increased market access can be fully exploited. 

Trade-related  assistance  to  help  concerned  countries  to  manage  economic  and  social 
adjustment is an important element of the EU’s multilateral agenda, expanded below. The EU 
has  significantly  increased  its  programming  for  trade  related  assistance  in  all  developing 
country  regions  over  the  last  four  years.  More  attention  must  however  be  given  in  future 
development  aid  programmes  to  helping  less  developed  countries  to  mainstream  trade  into 
their  poverty  reduction  strategies  and  to  manage  the  social  impact  of  trade  liberalisation, 
notably  through  the  creation  of  social  protection  mechanisms  and  a  socio-economic  floor 
upon which trade reform should be built. This should ensure a more favourable environment 
for investment and job creation in the formal economy and an equitable sharing of the gains 
of growth. The EU will encourage the same focus in the aid programmes provided by bilateral 
donors and other international organisations. 

5.3. 

Ensuring that trade policy is fully supportive of social development 

Trade  liberalisation  is  widely  acknowledged  to  be  a  key  factor  in  supporting  global  growth 
and development. By promoting competition and efficiency, continued growth in international 
trade is instrumental in maintaining higher rates of productivity growth. Although the regional 
integration highlighted earlier can foster growth, it remains a second best solution compared 
to  more  ambitious  multilateral  efforts.  According  to  the  World  Bank33,  the  gains  from 
implementation  of  the  WTO’s  Doha  Development  Agenda  (DDA),  could  lie  somewhere  in 
the region of $270bn-$520bn in 2015.  

Globalisation needs to be harnessed in support of the weakest and most vulnerable if it is to be 
fair and equitable. The Commission communication of 2001 on CLS34 suggested a range of 
trade  policy  initiatives  to  promote  social  development,  based  on  a  recognition  of  the 
universality of CLS, the EU’s support for the work of the ILO and its increased and enhanced 
co-operation with other international organisations. This approach was subsequently endorsed 
by the General Affairs Council on 21.07.2003.  

Since  the  2001  Communication,  the  Commission  has  promoted  its  general  approach  while 
working on the implementation of a number of concrete initiatives both in the multilateral and 

33 
34 

Global Economic Prospects 2004, Realizing the Development Promise of the Doha Agenda. 
Communication on Promoting Core Labour Standards and Improving Social Governance in the Context 
of Globalisation, COM(2001) 416 final of 18.7.2001, hereafter ‘the 2001 Communication’. 

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the bilateral spheres, including through the WTO35, with regard to the Generalised System of 
Preferences  (GSP)  and  in  bilateral  and  regional  relations  with  developing  countries36.  This 
section explains inter alia how the Commission has sought to implement the objectives set out 
in 2001 and how they can be pursued.  

The  DDA  negotiations  offer  an  opportunity  to  contribute  to  the  achievement  of  the  social 
development  goals  established  by  the  Millennium  Declaration  as  well  as  to  contribute  to 
sustainable  development.  They  have  great  potential  to  foster  long-term  economic  growth, 
stimulate trade and investment, promote sustainable development and the management of the 
challenges  of  globalisation  and  to  thereby  assist  developing  countries’  integration  into  the 
world trade system in a way that will help them combat poverty and raise living and working 
standards in an equitable manner37. The WCSDG acknowledges the crucial role of the DDA, 
and  encourages  efforts  to  make  multilateral  trade  liberalisation  mutually  beneficial  to  all 
countries  and  socially  equitable  within  them.  The  WCSDG  also  underlines  that  trade 
liberalisation  should  be  a  means  to  achieve  ultimate  objectives,  such  as  high  and  sustained 
growth, full employment, promotion of decent work and the reduction of poverty. The EU has 
sought  to  reflect  these  goals  in  its  own  negotiating  position  by  taking  account  of  social 
development  aspects  in  all  key  negotiating  areas,  in  many  cases  as  a  form  of  special  and 
differential treatment. In its September 2002 Communication on Trade and Development, the 
Commission identified three essential elements, subsequently endorsed by the Council, vital 
to  achieve  genuinely  pro-development  outcomes  in  the  DDA,  namely:  market  access; 
multilateral rules; and trade-related assistance and capacity building38.  

As  concerns  market  access,  the  EU  advocates  an  approach  under  which  all  WTO  Members 
contribute to the liberalisation process according to their level of economic development and 
capacities, while focussing on market opening or reduction of trade distortions for sectors and 
products of special interest to developing countries. In this way trade liberalisation can help 
poverty  reduction  and  economic  growth  in  developing  countries,  creating  the  conditions  for 
equitable  social  development.  Since  some  of  the  highest  barriers  to  trade  exist  between 
developing countries themselves, the creation of new markets through South-South trade will 
be  equally  important,  and  may  also  mitigate  the  concern  of  several  weaker  developing 
countries  about  the  impact  of  preference  erosion.  In  addition,  meaningful  initiatives  by 
developed WTO Members, such as the EU’s own granting of duty and quota free access for 
Least Developed Countries’ exports, remain an objective.  

The social consequences of trade policy changes are particularly evident in certain industrial 
sectors. In the steel sector, the recent US trade measures impacted not only on EU workers, 
but also on those in developing countries. In textiles and clothing, changes in the trade regime 
mean that certain weaker developing countries stand to lose the market share that quotas had 

35 

36 
37 

38 

The Council conclusions urged the EU to encourage discussions on an autonomous and voluntary basis 
on  the  social  development  issues  –  including  the  respect  of  CLS  –  during  the  Trade  Policy  Review 
(TPR) exercise in the WTO. In preparation of the upcoming EU TPR in July 2004, the Commission has 
started to gather evidence on the positive correlation between social standards in the EU and the EU’s 
economic  and  trade  performance.  The  Commission  believes  that  this  voluntary  exercise  constitutes  a 
useful  way  to  demonstrate  the  positive  correlation  between  social  development,  market  opening  and 
multilateral trade rules. 
These latter efforts have been described in section 5.1.1. 
Commission  Communication  on 
COM(2003) 734 final of 26.11.2003. 
This latter issue has been discussed in 5.2.2 

the  DDA  Negotiations-the  EU  perspective” 

reviving 

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previously  guaranteed39.  The  negative  impacts  of  certain  trade  policy  changes  call  for  an 
integrated  approach,  combining  adequate  domestic  social  policies  with  appropriate  donor 
support and opening of broader market opportunities for these countries’ exports. 

The Commission recognises that agriculture is a particular concern for developing countries. 
The  EU  has  embarked  on  reforming  its  agricultural  policies  toward  less  trade-distorting 
support,  including  a  significant  reduction  in  its  export  subsidies  and  the  promotion  of 
sustainable  development.  It  is  clear  that  agriculture  remains  at  the  heart  of  developing 
countries’ DDA interests. However the impact of liberalisation will, as in the textiles sector, 
be  ambiguous.  In  the  short  term  at  least,  net  food  importing  developing  countries  may  face 
higher  prices  causing  concerns  of  food  security40.  At  the  same  time  those  countries  that 
currently benefit from preferences, particularly the poorest, will see their preferential access 
eroded, with potential implications for their export earnings. Global, co-ordinated efforts are 
needed  to  maximise  gains  from  market  opening  and  minimise  any  negative  social  costs  of 
adjustment.  

A  key  problem  for  developing  countries  is  their  high  dependence  on  a  few  key  agricultural 
commodities. The solution is much wider than market access. In two recent Communications 
in  February  2004,  the  Commission  suggested  integrated  approaches  to  achieve  sustainable 
development, including through trade, for countries dependent on commodities in general and 
cotton  in  particular41.  This  involves  a  series  of  trade  and  non-trade  measures  including 
encouraging more sustainable practices along the commodity supply chain. 

In parallel, negotiations in services also have much to offer in terms of greater opportunities 
for  South-South  trade  and  the  liberalisation  of  those  services  sectors  that  provide  the  key 
infrastructure for economic development and growth or environmental protection. Given the 
particular  nature  of  the  sector  and  its  growing  relevance  for  employment  creation,  specific 
efforts in terms of assisting less experienced developing countries in mastering the challenges 
of regulatory reform will be necessary. The EU will contribute to this. As concerns the rule-
making  component  of  the  DDA,  it  is  of  great  importance,  for  developed  and  developing 
countries  alike,  to  create  optimal  conditions  for  cross  border  trade  (trade  facilitation),  to 
encourage  a  climate  attractive  to  productive  foreign  direct  investment,  to  promote  fair 
competition and the procurement of quality goods and services for its citizens at decent prices. 
Although WTO members remain divided about the appropriateness of multilateral rules in all 
of these areas, the Commission remains convinced that they would foster a more stable and 
transparent  economic  environment  that  will  in  turn  be  conducive  to  sustained  economic 
growth, in particular in developing countries.  

39 

40 

41 

The European Commission itself has started to follow up on its own Communication on the Future of 
The  Textiles  and  Clothing  Sector,  COM(2003)  649  final  of  29.10.2003  with  the  creation  of  a  High-
Level Group to recommend possible initiatives to facilitate the sector’s adjustment. Concrete actions are 
also  proposed  in  the  follow  up  of  the  SIA  on  textiles  and  clothing  in  an  official  positioning  paper  of 
the Commission. 
See, 
the European Commission. 
Proposal  for  an  EU  action  plan  on  Agricultural  Commodity  Chains,  Dependence  and  Poverty’  and 
‘Proposal for an EU-Africa Partnership in support of cotton development’. 

for  example,  SIA  of  WTO  negotiations, 

sector,  SEI,  2002, 

food  crops 

for 

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Promoting social development through market access for developing countries  

The  Commission  supports  the  promotion  of  core  labour  standards  and  the  broader  goal  of 
decent work and uses trade instruments where appropriate. It agrees with the WCSDG on the 
importance of ensuring market access for developing countries and it secures high levels of 
access for developing countries to its market in a number of ways. Least Developed Countries 
and  ACP  partners  benefit  from  exceptionally  high  levels  of  access  to  the  EU  market42. 
Beyond  these  special  schemes  the  GSP  (Generalised  System  of  Preferences)  provides 
significant preferential access to all developing countries. The GSP contains a social incentive 
system  whereby  effective  compliance  with  core  labour  standards  qualifies  a  beneficiary  for 
additional trade preferences. The revision of the GSP scheme in 2002 made the scheme more 
attractive  to  developing  countries  by  widening  the  additional  trade  preferences.  A  further 
reform  of  the  scheme,  to  be  applicable  from  2006,  will  focus  on  maximising  benefits  to 
recipients and promoting the full application of core labour standards in beneficiary countries. 

5.4. 

Promoting private initiatives for social development 

Governments  have  an  essential  responsibility  in  securing  equitable  social  development.  The 
private  sector  however  can  also  be  a  powerful,  complementary  conduit  for  change. 
Companies, both national and transnational, the wider business community, trade unions and 
broader  civil  society  can  contribute  to  attain  social  goals  and  promoting  good  social 
governance both in the EU and elsewhere. Companies increasingly recognise that responsible 
business  conduct  can  strengthen  their  competitiveness.  Another  important  aspect  is  that 
globalisation  and  the  media  revolution  have  contributed  to  the  empowerment  of  public 
opinion  enabling  pressure  for  a  better  social  governance  in  the  global  economy.  Socially 
responsible  trade,  business  and  investment  and  promoting  accountability  throughout  the 
supply chain for goods and services are higher on the public agenda43.  

Corporate  Social  Responsibility  (CSR)  is  an  approach  which  can  help  trade  and  investment 
work for sustainable development. In 2002 the EU adopted a strategy to promote CSR which 
is  in  line  with  the  proposals  and  recommendations  of  the  WCSDG44.  The  Commission 
subsequently  took  a  number  of  initiatives  to  promote  CSR,  including  awareness  raising 
initiatives  on  the  business  case  for  CSR,  exploring  the  feasibility  and  desirability  of 
developing  criteria/guidelines  for  fair  and  ethical  voluntary  trading  scheme  at  Community 
level,  promoting  the  development  of  global  codes  of  conduct  by  EU  social  partners  and 
enhancing synergies with trade policies.  

The  Commission  also  established  the  European  Multi-stakeholder  CSR  Forum  aiming  at 
developing a new form of dialogue and linkages between different policy areas and interests 
and  at  exploring  how  to  define  an  EU  approach  and  guiding  principles.  The  Forum  brings 
together  the  main  EU  stakeholders  -  organisations  of  employers  and  business,  trade  unions 
and  civil  society.  The  Forum  has  addressed  a  wide  spectrum  of  issues:  better  knowledge, 

42 

43 
44 

ACP countries under the Cotonou agreement where the vast majority of tariff lines are already subject 
to zero tariffs and where free trade areas will be negotiated with ACP partners over the coming years. 
LDCs  under  the  Everything  But  Arms  initiative  (a  special  arrangement  within  the  GSP)  where  there 
will be no tariffs at all for the Least Developed Countries from 2008. 
WCSDG report, § 546-559 and annexe. 
COM(2001)  416  final,  Council  conclusions  of  21.7.2003,  Resolution  of  the  European  Parliament  of 
July  2002  and  Commission  communication,  COM(2002)  347  final,  2.7.2002,  'CSR:  A  business 
contribution to sustainable development’. 

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specific  needs  of  SMEs  and  the  promotion  of  effective  transparency.  It  has  discussed 
development  issues  such  as:  tackling  HIV/AIDS  in  Africa,  the  application  of  CLS  in  the 
textiles sector and financial transparency in the extractive industries. It will conclude its work 
with a report in summer 2004. 

The  Commission  notes  with  interest  that  the  WCSDG  recommends  that  the  ILO  should 
convene a global multi stakeholder's forum on CSR45. The WCSDG acknowledges that there 
is scepticism in some quarters about the real impact of CSR schemes. The Commission agrees 
with the WCSDG that voluntary initiatives can only complement legislation and social policy 
and that they should promote higher standards. The Commission agrees that the contribution 
of voluntary initiatives can be strengthened in a number of ways. Consumers and civil society 
need to have some assurance that they are more than a PR exercise and do lead to significant 
positive impacts. To be credible CSR instruments need to be developed transparently, in full 
consultation with the social partners and other relevant stakeholders and their implementation 
needs to be verifiable. In this connection, efforts in terms of reporting are needed. If they are 
to take account of the circumstances in third countries, local social partners and other relevant 
stakeholders also need to be fully implicated in the process. The Commission considers that 
further thought should be given to ways to operationalise these objectives and to identify best 
practices. 

As  part  of  policies  on  CSR,  private  codes  of  conduct  and  broad-based  sector  level 
partnerships relating to labour issues including CLS, broader human rights and environment, 
can  play  a  useful  role.  In  relation  to  labour  issues,  they  should  take  into  account  relevant 
internationally agreed standards46and be seen as complementary to legislation, its enforcement 
and  collective  agreements47.  European  and  global  social  dialogue  can  also  promote  a  more 
coherent  framework  for  codes  of  conduct  and  for  partnerships.  European  sectoral  social 
dialogue committees have already agreed on sectoral codes of conduct applicable in EU and 
in the global supply chains48. Several European companies have signed codes of conduct in 
the framework of their European works councils.  

In  addition,  the  Commission  actively  supports  the  application  of  the  OECD  Guidelines  for 
Multinational  Enterprises.  These  provide  benchmarks  for  responsible  business  conduct,  but 
we  need  to  work  to  ensure  that  implementation  is  more  rigorous  and  consistent.  One  of  the 
difficulties  with  ensuring  wider  uptake  is  the  free  rider  problem  –  non-active  corporations 
benefit from the activities of others without making efforts themselves. One way by which the 
Commission is seeking to increase uptake is by building references to the Guidelines into its 
bilateral agreements (eg EU-Chile Association Agreement; agreement under negotiation with 
Mercosur).  Thought  should  be  given  to  securing  more  generalised  uptake  either  through 
concerted private action and/or government initiatives, such as making support measures like 
export credits contingent on conformity with the OECD Guidelines.  

45 
46 

47 

48 

WCSDG report, § 554-557, 613-616. 
The  European  approach  to  CSR  reflects  and  is  integrated  in  the  broader  context  of  various 
internationally  agreed  standards,  such  as  the  ILO  Tripartite  Declaration  of  Principles  concerning 
Multinational  Enterprises  and  Social  Policy  (1977/2000),  the  OECD  Guidelines  for  Multinational 
Enterprises (2000). 
Global social partners in one the most globalised sectors, the shipping industry, have even concluded an 
international collective agreement. Commission, Member States and EU social partners are involved in 
the ongoing ILO work on the consolidation of maritime ILO standards. 
http://europa.eu.int/comm/employment_social/publications/2003/ke4702397_en.html  

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5.5. 

Governance at global level  

The  contribution  of  the  international  institutions  to  socially  sustainable  globalisation  is  a 
prerequisite  for  progress.  The  multilateral  system  needs  to  become  more  effective  to  cope 
with  existing  and  emerging  challenges  to  global  governance  and  the  rule  of  law49.  The 
Commission  supports  a  coherent  and  holistic  approach  to  questions  relating  to  the  social 
dimension of globalisation in WTO, International Financial Institutions (IFIs) and across UN 
bodies as well as the strengthening of key bodies, including the ILO50.  

In  relation  to  the  UN  there  is  a  need  to  ensure  policy  consistency  between  ECOSOC,  the 
Commission for Social Development and the Third Committee of the UN General Assembly. 
The  Commission  believes  that  serious  consideration  should  be  given  to  existing  proposals 
such  as  the  establishment  of  an  Economic  and  Social  Security  Council.  The  results  of  the 
High-Level  Panel  on  UN  reform  established  by  the  UN  Secretary-General  should  be  taken 
into  account  in  that  context.  The  Commission  considers  that  the  first  steps  to  increase  co-
ordination  and  coherence  should  focus  on  enhancing  the  efficiency  of  existing  bodies.  The 
present mandate of ECOSOC should be addressed in that context. The EU is ready to play a 
very active role to lead the process relating to the development of the international agenda. It 
recognises  the  need  to  step  up  efforts  to  raise  its  profile  in  the  form  of  a  comprehensive 
approach to peace, security and development. The Commission is committed to strengthening 
its contribution.  

The EU should also aim to speak more consistently with one voice in the whole range of UN 
fora and other international organisations dealing with social and economic issues in order to 
ensure policy coherence. The Commission will continue to actively support EU co-ordination 
through  better  exchange  of  information  and  preparing  proposals  for  EU  positions  and 
initiatives. The EU is also ready to encourage partner countries to enhance their follow-up to 
multilateral  commitments  and  goals  through  implementation,  both  in  the  framework  of  the 
bilateral dialogue and through providing assistance to the countries who need it. 

The  IFIs,  the  WTO  and  the  UN  system  in  their  aid-providing,  market  opening  and  norm-
setting roles must work consistently and in a co-ordinated manner towards the strategic goal 
of  sustainable  development.  There  is  a  need  to  move  from  declarations  and  nominal 
coherence  to  effective  and  concerted  action  based  on  complementarity  and  identification  of 
positive  synergies.  This  depends  crucially  on  the  will  of  their  member  states  –  both 
developing  and  developed  countries.  It  also  requires  the  system  of  global  economic 
governance to be efficient, inclusive and representative. 

Improving the WTO negotiation process would contribute to making the multilateral trading 
system fairer and more socially equitable. The WCSDG’s report correctly observes that better 
participation of developing countries in WTO negotiations would be conducive to their efforts 
to  link  trade  liberalisation  more  effectively  to  domestic  social  development  agendas.51  The 
Commission has made concrete proposals related to the preparation and to the organisation of 
Ministerial Conferences, and to working methods and decision-making procedures, aimed at 

49 

50 
51 

This position is both reflected in the Commission’s Communication on the EU and the UN: the choice 
of multilateralism (COM(2003) 526, 10.9.2003) and the Council conclusions concerning this, as well as 
in the European Security Strategy, adopted by the European Council in December 2003. 
In line with the 2001 Communication. 
The  Doha  Development  Agenda  is,  in  itself,  an  important  step  in  this  direction,  putting  development 
concerns at the heart of trade negotiations. 

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increasing the participation in the WTO system of developing countries, in particular the least 
developed  amongst  them.  However  bringing  the  multilateral  trade  agenda  closer  to  social 
development  concerns  cannot  happen  in  isolation  within  the  WTO.  The  EU  should  aim  to 
improve co-ordination on matters related to social governance in the context of globalisation 
and assure coherence on this issue in all relevant international organisations, including in the 
WTO and in the ILO52. It should also promote a more effective dialogue between the WTO 
and the ILO with the aim of observer status for the ILO in the WTO.  

The WCSDG has suggested a number of innovative ways to achieve greater quality in policy 
coherence at the international level, both through confirming shared objectives, in particular 
decent  work  and  through  a  number  of  new  co-operation  mechanisms.  The  suggested  Policy 
Coherence  Initiatives,  Policy  Development  Dialogues  and  the  ‘Globalisation  Policy  Forum’ 
all appear promising in binding the multilateral agenda more closely to the heart of peoples’ 
concerns,  however  mandates  should  be  clear  and  focused  if  they  are  to  be  effective.  The 
participation  of  the  economic,  trade,  financial  and  social  organisations  in  such  policy 
coherence initiatives, in particular those related to global growth, investment and employment 
creation, would be an especially useful inspiration for the successful completion of the current 
trade round and it best contribution to a fair outcome. 

The  IFIs  have  a  key  role  to  play  in  supporting  sound  governance  in  the  developing  world. 
Policy  coherence  within  these  organisations  and  between  them  and  the  wider  multi-lateral 
system  is  vital  if  a  global  environment  supportive  of  sustainable  development  is  to  be 
achieved.  Support  for  policies  that  ensure  effective  engagement  with  the  world  economy, 
while supporting wider sustainability objectives, should be a priority.  

The euro has swiftly established itself as the second internationally used currency, but the EU 
does  not  currently  impact  as  strongly  as  it  might  do  on  the  policies  of  the  international 
financial  institutions  and  this  weakens  policy  coherence.  Its  voice  remains  fragmented  and 
thus its ability to influence key policy decisions and orientations is muted. This is problematic 
as  these  institutions  have  a  defining  role  in  development  and  the  management  of  financial 
crises.  In  addition  it  poses  problems  for  the  EU’s  own  policy  coherence  within  the  trade, 
finance  and  norm  setting  pillars  of  global  economic  governance.  The  leverage  of  the  EU  to 
promote  a  model  of  development  which  fully  integrates  the  social  dimension  would  be 
considerably  increased  by  a  unified  presence  in  the  institutions  of  multilateral  economic 
governance.  This  means  speaking  with  one  voice,  pursuing  a  common  position  through 
qualified majority voting and voting as a group.  

The  international  trade  and  financial  institutions  have  become  the  focus  of  unprecedented 
interest in civil society. As proposed by the WCSDG they need to become more transparent 
and inclusive and the organisations of employers and workers and broader civil society should 
be  more  involved.  The  example  of  the  OECD,  where  employers  and  workers  are  formally 
represented and consulted, is an interesting approach in this respect53. The Commission also 
attaches great importance to promoting an active dialogue with the organisations of employers 
and  workers  and  broader  civil  society.  The  Commission  will  continue  to  improve  dialogue 
with its stakeholders on the different processes and issues related to the social dimension of 
globalisation. 

52 
53 

General Affairs Council conclusions of 21 July 2003. 
WCSDG report, § 562. 

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As highlighted by the WCSDG report54, research and data collection on the social dimension 
should  be  strengthened.  In  the  context  of  6th  Framework  Research  Programme,  the 
Commission is planning to launch a Network of Excellence to conduct research on the issue 
of  ‘Global  governance,  regulatory  frameworks  and  the  role  of  the  EU’.  This  will  include 
analysis of the social dimension. 

6. 

CONCLUSION 

In this communication the Commission sets out its initial views on some of the issues raised 
in  the  report  of  the  WCSDG.  Overall  the  report  delivers  balanced,  critical  but  positive 
messages  that  can  be  the  basis  for  future  action.  It  recognises  that  some  steps  have  already 
been taken at global, regional and national levels but it makes it very clear that much more 
should be done at all levels in a complementary and mutually reinforcing way to extend the 
benefits of globalisation to all. This is a challenge to both the EU and its Member States. The 
effective follow-up of the report, by all partners, will be of key importance.  

The  EU  has  already  developed  initiatives  and  policies  to  address  the  social  dimension  of 
globalisation both in Europe and elsewhere. It is now important that the Union, at the highest 
political level, expresses its commitment to taking action to strengthen this dimension in the 
light of the WCSDG's report and the initial proposals made in this Communication. 

54 

WCSDG report, § 623-629. 

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