Est. 4min 13-03-2006 (updated: 04-06-2012 ) metro_crowd_isp.jpg Euractiv is part of the Trust Project >>> Languages: Français | DeutschPrint Email Facebook X LinkedIn WhatsApp Telegram The flooding onto the EU market of cheap shoes and textiles from China in recent months has brought home to Europeans that their traditional industries may be under threat in a globalised world. Cheap goods from the east In the last month European Trade Commissioner Peter Mandelson has proposed implementing anti-dumping duties on leather shoes imported from China and Vietnam. The reason is that these goods are so much cheaper than the EU-made alternative that they threaten the market for European shoes and therefore the jobs of those who make them. Mandelson is only permitted to do this if he can show anti-competitive practices by the overseas manufacturers. In the case of shoes he argues he can (see EURACTIV 24 Feb 2006). This was not so when cheap Chinese textiles began to flood the market last year following the lifting of WTO trade restrictions in January 2005. Here, import restrictions were imposed and, although an agreement was eventually reached with China, the fact remains that such measures are at base protectionist. The question therefore is: how can a globalised world cope with fully free trade while ensuring the preservation of traditional regional industries? Outsourcing A second issue is jobs going out of the EU to be relocated in areas where labour is less expensive. The obvious example is the number of call centres located in India. Many manufacturing companies have also found that it is cheaper to move their production outside the EU. These are jobs that used to be available for EU workers. Company takeovers The recent bid by Mittal Steel – a company based in Rotterdam, whose CEO and President both hold Indian passports – for the Luxemburg-based Arcelor has highlighted another area of concern. In a globalised, free-trade world national-based private companies will become increasingly vulnerable to foreign takeover bids. This leads to further concern for jobs. The position of the EU, voiced volubly by Commissioners Kroes (competition) and McCreevy (internal market – see speech, 9 March 2006) is that nationalism and protectionism should play no part in the ownership of companies: if a proposed takeover does not breach competition rules, it should go ahead. So far, however, this principle has been exercised predominantly in relation to mergers within Europe. Will it remain the same regarding takeover bids from non-EU firms? Archaic labour laws? One of the main reasons why goods can be produced so cheaply in the east is that the cost of labour is much lower. But added to that must be the fact that over the 30 years following the second world war, when the western world dominated all trade and trade unions became very strong, most European countries developed a set of labour laws which give rights to employees on pay levels, working hours, holidays etc quite unknown in eastern countries. Many argue that it is now time for these laws to be reformed to allow the flexibility needed to compete in a 21st century market. European Globalisation Adjustment Fund In March 2006, the Commission proposed the setting up of a fund to help workers in areas affected by trade shifts. It is proposed that the European Globalisation Adjustment Fund (EGF) would have up to €500 million to be distributed for the benefit of 50,000 workers. It would provide retraining, job search assistance and the promotion of entrepreneurship. Read more with Euractiv China /EU trade issues pile up The latest anti-dumping complaint to be brought against China may concern unfairly cheap furniture. Subscribe now to our newsletter EU Elections Decoded Email Address * Politics Newsletters PositionsIn 2002 the International Labour Organisation (ILO) set up a World Commission to report into the social dimension of globalisation. The report , published in 2004, concluded that, "Seen through the eyes of the vast majority of men and women around the world, globalisation has not met their simple aspiration for decent jobs, livelihoods and a better future for their children". Speaking to an ILO Forum in May 2005, Trade Commissioner Mandelson said that in the light of the continuing growth in competition from China, India and South America, "Europe is faced with a fundamental choice of directions." He continues, "One way is to take the line of least resistance and to bow to the populism either of the Left that rejects globalisation or the populism of the Right that blames foreigners for everything. But this is a cul-de-sac, because by putting up barriers between ourselves and world markets, we may save jobs in the short term but at the cost of our industries becoming globally uncompetitive in the longer term. The only alternative is the difficult and painful tasks of reform and modernisation." Launching the European Globalisation Adjustment Fund, Commission President Barroso said, "The fund will express the Union’s solidarity towards those severely and personally affected by trade-adjustment redundancies. In this way, it will provide a stimulus to respond appropriately and effectively to the adverse impact of market opening. The fund will help workers made redundant back to work because we want a competitive, but also a fair EU." Pascal Lamy, head of the World Trade Organisation is firmly in favour of the open and free markets that accompany globalisation. Speaking in November 2005, he said, "Multilateral rules fostering open trade are virtuous, and exceptions to those rules, much as they might be needed for political conveniences at certain moments in time, should remain what they are — exceptions, not rules — and that the multilateral community should strive to overcome them." Oxfam International, however, argues that "rich countries and powerful corporations have captured a disproportionate share of the benefits of trade, while developing countries and poor men and women have been left behind or made worse off. World trade rules have been developed by the rich and powerful on the basis of their narrow commercial interests. Governments and companies who preach the virtues of free trade the loudest are the most guilty of practising protectionism when it suits them." André Sapir, from the Brussels think tank Bruegel, argues in a policy brief that Europe’s current labour market and labour laws have become dysfunctional in a global market. "As recently as 1970, the share of developing countries in developed countries imports of manufactured products was barely 10%. Today, their share is over 45%," he says. In his view, Europe faces the choice of "reforming national labour market and social policies or continuing to hinder change." ETUC, the European trade union group considers that the effects of globalisation should be managed so that it delivers its proper benefits without eroding the rights of workers. It has urged the EU and governments to ensure that workers are assured adequate job protection, proper consultation, access to retraining and sufficient unemployment benefits. ETUC welcomed the Commission’s EGF initiative but wants more consultation with social partners on how the fund is used. BackgroundMarkets are no longer national or even European, but international. The world is becoming smaller: goods can be made and food produced anywhere in the world, then shipped to anywhere else. Thanks to the internet, services can be provided from any country or any continent to anywhere else on the planet. The potential impact, therefore, on traditional sources of employment is huge. In the past 20 years global trade patterns have radically changed, due in large part to the adoption of market capitalism by China and India. While the EU’s estimated annual economic growth stands at 2%, that of the emerging economies is thought likely to grow by 6% per annum for years to come. Timeline The European Globalisation Adjustment Fund is planned for operation from 1 Jan 2007. Further ReadingEU official documents RAPID: Speech Peter Mandelson:Leather footwear, tough competition and unfair trade(14 March 2006) DG Employment:Proposal for a Regulation establishing the European Globalisation Adjustment Fund(1 March 2006) [FR] [FR] [DE] [FR] [DE] MEMO DG Employment:Commission proposes up to €500 million per year for a new European Globalisation adjustment Fund to support workers.(1 March 2006) Eur-Lex:Commmunication :The social dimension of globalisation - the EU's policy contribution on extending the benefits to all [FR] [FR] [DE] DG Employment:Key Documents DG Trade: Speech by commissioner MandelsonTrade policy for a social Europe(26 May 2005) International Organisations International Labour Organisation:Report: A fair globalization - Creating opportunities for all" World Commission on the Social Dimension of Globalization:website Oxfam International:Harnessing trade for development(24 Nov 05) WTO:Speech by Pascal Lamy(2 Nov 2005) Business & Industry European Trade Union Confederation (ETUC):ETUC welcomes the setting up of the European Globalisation adjustment Fund but would like to see a reinforcement of the social partners’ role in the process of reintegration(1 March 2006) ETUC:ETUC tells European finance ministers not to put the full burden of adjustment on workers’ shoulders(Dec 2005) NGOs and Think-Tanks Bruegel:Globalisation and the reform of European Social Models(Jan 2005) DB Research:The Hamburg wage settlements – defying economic reason(March 2006) Press articles Times Online:Selling off the family silver(7 March 2006) Irish Southern Star:Worker exploitation(10 March 2006) FT:Eastern Germany sets pace for reform(8 March 2006) Voir:Requiem pour un concept(9 March 2006) Le Monde:Mittal Steel veut lancer son OPA sur Arcelor début avril(10 March 2006) VWD:Arcelor-CEO will Mittal unter allen Umständen abwehren(10 March 2006)
