Dear friends,

In drawing up my report on 'Standard setting for European enterprises operating in developing countries towards a Code of Conduct,' many of you provided vital evidence and information, and have continued to do so in the months that followed. With a date set for the Hearings I thought now would be an opportune moment to update you on the progress made at a European level. If you require more information on any of the areas mentioned in this Update please do not hesitate to contact Lola Almudévar who is my new researcher in the Brussels office, and please do keep us up to date with your news and activities.

Bon courage!

Richard Howitt MEP

European Parliament Rapporteur

DG Employment gets to work on the Code of Conduct

Budging the budget lines forward

As a direct result of my 1999 resolution the budget line B3-4000 was expanded to include subchapter IV 'promotion and development of codes of conduct or social labelling and other initiatives designed to promote ethical production and consumption (in conjunction with social issues)'. This budget line effectively supports projects that will further the debate, at a European level, on Codes of Conduct for MNCs.

The first deadline for project proposals under this budget line fell in February 2000 without a single application for funding. But since then progress has picked up significantly. In April two proposals were selected from the European Textile and Clothing Federation and the 'Fédération Artisans du Monde'.

In June five proposals were selected from 'Réseau de Consommateurs Responsables Asbl', the Initiative for Ethical Production and Consumption in Europe (IEPCE), the 'Democratic Federative Movement - Active Citizenship', the European Clothing and Textile Federation and the Madariaga European research Foundation for the College of Europe. This last project is advising the Commission on the need for and design of a monitoring mechanism at the European level. This is particularly crucial to the implementation of the resolution, and I encourage you to make contact with their work through Bianca Busuioc, email bbusuioc@madariaga.org

In September six projects were accepted from the 'Institut Français de Qualité Social', 'Transfair - Rugmark', 'Banana Link', the Italian trade union CISL, the Centre for research on multinational corporations (SOMO) and the Spanish trade union UGT.

The Commission selects proposals on the basis of their relevance to the EU and the debate on social labelling. It is trying to give more priority to projects that are transnational and include a large number of actors. The Commission provides 80% of the funding for projects. The more proposals the Commission receives, the more varied and constructive the discussion becomes, so please do get involved. The Commission official responsible for this budget line is the hugely dynamic and helpful Hilde De Clerck, email her at Hilde.De-Clerck@cec.eu.int

Taking the initiative - IEPCE

Last December, I was delighted to help launch the IEPCE, (European Initiative for Ethical Trade and Consumption), set up with the intended mission of enhancing and encouraging ethical production and consumption of products made by European Companies producing in Europe. It is a four-party European forum based on European-level partnership between the main social and economic players who wish to encourage ethical production and consumption (employers, trade unions, NGOs, public institutions). I regard this as a vital organisation to collate and share information on ethical business initiatives across the European Union. Round Tables have taken place in Italy, France, Belgium, Finland, Sweden and Germany. More information can be found on the IEPCE website http://www.iepce.org

Commissioner comes on board for caring corporations

The European Commissioner for Employment and Social Affairs, Anna Diamantopoulou has voiced her avid support, both publicly and in private conversation, for my resolution and her intention to play an active role in the future.

There is an ongoing discussion in the Commission about whether and how requirements for compliance on socially responsible activities could be put on European enterprises. We were successful in ensuring that corporate social responsibility is included in the priority list for future actions of the Commission 'Anticipating and managing change and adapting to the new working environment' is included as one of the Commmission's priorities, and in the subsequent points of action the Commission pledges to 'support initiatives related to corporate social responsibility and management of change by issuing a communication address the social aspects of public procurement proceedings by issuing a communication' I am following this closely.

I feel extremely encouraged by the recent address of Commissioner Diamantopoulou to the EU Committee of the American Chamber of Commerce when she stated: "With time and commitment, I am confident that codes of conduct can be made even more effective, particularly if they are developed in broad partnership and used not as an alternative to other instruments but in conjunction with them. The notion of 'social labelling', especially with respect to the protection of children, is one of the tools that can help businesses to work in an ethical way." This speech and information about the Social Policy Agenda is available on the Employment and Social Affairs website: http://europa.eu.int/comm/dgs/employment_social/speeches/001030ad.pdf

Slow progress inside external services

Talking trade

I am pleased to see that the European Commission's DG Trade is now becoming active on the issue of standard setting. The debate in DG trade was kick started by events such as the Seattle demonstrations and the drawing up of the OECD guidelines on multinational enterprises in June.

Commissioner Pascal Lamy is clearly concerned by issues relating to developing countries, and has made notable efforts to engage with NGOs on relevant issues, such as the round table to be held on November 23rd to discuss issues relating to 'trade and the Millennium Round. More information about this can be found on DG Trade's website: http://europa.eu.int/comm/trade/2000_round/csc.htm

The head of Unit in DG Trade, responsible for investment, standards and certification and the implementation of the OECD guidelines is Mr Mauro Petriccione. I have begun discussions with him about a proposal to hold a joint European Parliament / European Commission Conference on the OECD guidelines next year. Mauro Petriccione's email is email is Mauro.Petriccione@cec.eu.int

More RELAX than RELEX

I made amendments in 1999 to this year's budget. Two of these were to budget lines that fall under the jurisdiction of Commissioner Chris Patten, DG RELEX (External relations). B7-300 - financial and technical co-operation with Asian developing countries and B7-311 - economic co-operation with Latin American developing countries are now also 'intended to cover support for trade unions, Non governmental organisations and local initiatives to monitor the impact of European investments on the national economy, particularly codes of conduct and sectoral agreements incorporating respect for labour, environmental, social and human rights standards'.

I also attached an amendment to a budget line that falls under the remit of Commissioner Poul Nielson, DG Development, or more specifically the co-financing unit B7-643 - Specific aid schemes in the field of development: Decentralised co-operation in the developing countries. Following this amendment the remarks now include 'European Parliament resolution of 15 January 1999 on EU standards for European enterprises operating in developing countries: towards a European Code of Conduct (O) C 104, 14, 14.4.1999, p. 180.

In July 2000 I put an oral question (N°62 H-0558/00) to the Commission to try and establish how my budgetary amendments were being followed up. The response I received was totally inadequate. It appeared that no proposals for projects relating to standards for European enterprises operating in developing countries had been sought or received. The Commissioners disclosure that "No service of the Commission has been allocated responsibility for the setting of standards for Community enterprises operating in developing countries, as this is not an area in which the Commission has plans for action" gave cause for considerable concern.

Nonetheless, I was reassured somewhat by subsequent conversations with Commission officials. I now understand that 'socials justice and the promotion of labour and human rights' falls under the banner of 'good governance and the rule of law', funded by B7-701 of B7-7 the budget line for human rights and democratisation. This area is, I am told, is seen as a high priority for the Commission in its relations with third countries, and this was certainly reflected in the new EU-ACP Cotonou Agreement signed in June.

There are other budget lines that relate to corporate social responsibility. The fact that these are dispersed throughout the Commission - in both the external and internal services - heightens the need for better coherence and co-ordination inside the Commission.

The problem in the Commission's external services has become even more confused by the current reform of the management of external assistance.

I understand that the Commission is currently drawing up its Human Rights priorities and in doing so will set out its position on corporate social responsibility. These priorities will be put forward by way of a Communication to the Parliament and the Council in February 2001. More information about this Communication and the Commission's human rights activities can be obtained from: Alessandro.Palmero@cec.eu.int. I will be writing to Commissioner Patten regarding in anticipation of the Communication and will continue to follow up the budget lines until I receive a full and positive answer.

I think that it is crucially important that we start getting European funding to trade unions, small producer and civil society groups in the South to undertake pilot projects on European enterprises from these budget lines. Therefore I strongly urge you to contact your Southern partners and to bring forward proposals for using the available money - or we will lose it!

The call for proposals for budget lines is published on the internet at the end of each year. Specific information about the co-financing budget line B7-6000, which contains B7-643, and how to apply can be found on the DG Development website: http://europa.eu.int/comm/development/sector/ngo/cofinancing_en.htm

The head of the co-financing unit is Tim Clarke email Timothy.Clarke@cec.eu.int. The official responsible for B7-7 is José Zarzoso Jose.Zarzoso@cec.eu.int. B7-311 is administered by Erminia Notarangelo Erminia.Notarangelo@cec.eu.int. B7-300 is dealt with by Georges Ponette Georges.Ponette@cec.eu.int.

The more enquiries and proposals received by the Commission, the more pressure there is for DG RELEX and Development to make a real commitment to standard setting, but be prepared for the frustrating rigmarole that seems to be a prerequisite for extracting information on these budget lines from the Commission!

Pushing from the Parliament

The knock on effect

My resolution generated a great deal of interest, support and even controversy in the European Parliament. Subsequent reports have reaffirmed the Parliament's commitment to standard setting for MNCs, most notably the Schwaiger report adopted in November 1999 on the communication from the Commission to the Council and the European Parliament on the EU approach to the WTO Millennium Round (A5-0062/99).

Rappor-tour around Europe

I have continued to champion the need for more debate, more commitment and more action in facilitating ethical enterprise in developing countries by speaking at numerous high level European conferences. For example in one week, I recently attended the Triple Bottom Line Conference in Rotterdam, the American Chamber conference and CSR conference in Brussels. I want to keep driving the debate forward by engaging with NGOs, businesses, academics, political bodies and any other individuals involved in the debate, so please keep sending invitations!

I have been astounded by the level of support from NGOs and campaigning individuals. Last year Amnesty International organised demonstrations in favour of my resolution across Europe for international labour day. Baby Milk Action and the Clean Clothes Campaign have consistently promoted the resolution and EU activities in this field on their websites and in newsletters. More information can be found at http://www.babymilkaction.org and http://www.cleanclothes.org. In February 2000 Amnesty International UK published a groundbreaking report written by Chris Avery, which gives great support to my resolution. The report entitled Business and Human Rights in a Time of Change (London: Amnesty International UK, February 2000) can be found at http://www.business-humanrights.org/Avery-Report.htm.

This kind of campaigning support is vital in intensifying the debate and increasing awareness amongst citizens and policy makers alike. Time and time again we see that the European agenda is being drawn up according to what policy makers see as the priorities of Europe's citizens. Greater public pressure is the fuel and food of a more socially conscious Europe.

Hearing the message loud and clear

Of course the best news concerns the Parliamentary Hearing on standard setting for European enterprises in developing countries. After a battle to reach agreement on the sectors to be discussed and the format of the meeting, the date is set for 22 November 2000.

The Parliament's Development Committee will hear evidence presented on the sportswear clothing industry in Indonesia and baby milk substitute marketing in Pakistan. Representatives from Civil Society, the UN, academic bodies and Nestlé and Adidas have been invited. I understand that there is some doubt about their participating in the meeting and will be interested to hear their final response.

The event paves the way for annual hearings with the potential to address the practise of any multinational in any sector in any developing country. I sincerely hope that many of you will be in the audience and that afterwards we can discuss the next steps in taking issue forward at a European level.

Programmes and logistical information can be obtained from Richard Wester, email rwester@europarl.eu.int or by calling his secretary, Dolores Ruiz Vicente on 00 322 287 7056, and don't forget, you can always get in touch with my office for further information.

13G246, European Parliament, Rue Wiertz, 1047, Brussels, Belgium.
Tel: 00 322 284 5477 Fax: 00 322 284 9477

email: rhowitt@europarl.eu.int