Labour provisions in preferential trade agreements: Current practice and outlook

Abstract

Abstract. While the WTO and Doha Development Round do not deal with labour issues – they leave this to the ILO – the main countries that conclude free trade agreements incorporate labour provisions, which vary in terms of stringency. Sanctions are rarely used, and fears that “social clauses” would serve protectionist purposes have proved to be unfounded. Labour provisions are designed to meet a variety of sometimes conflicting goals, by means of different mechanisms aimed at improving labour practices and promoting Decent Work; the author makes a number of suggestions in this regard.

Crossvergence of socially (ir)responsible employment practices in supplier firms

“…Price pressure -Pressure of lead firms on supplier to keep sales prices as low as possible Lead time pressure -Pressure of lead firms on supplier to deliver the order in short lead times Flexibility pressure -Pressure of lead firm on supplier to flexibly respond to production demands Quality pressure -Pressure of lead firms on suppliers to adhere to product quality specifications Chan and Ross (2003), Davies and Vadlamannati (2013); Dhanarajan (2004), Greer and Hauptmeier (2016), Perry et al (2015), Rodgers (2007); Standing (1999), Tjandraningsih (2013); Tokatli et al (2008) Global public labor market regulation and initiatives Global public labor standards set by ILO set by international finance institutions integrated in trade agreements Technical assistance -Projects of international organizations offering support to suppliers Activist pressure -Labor-related campaigns of global unions, non-governmental organizations (NGOs), and the media Anner (2001), Brown (2016); Caraway (2010), Ebert (2016), Hafner-Burton andTsutsui (2005), MacIntosh (2013), Rossi (2015), Schrank (2013), Siroën (2013), Stallings (2010, Tsogas (2001) Global private labor market regulation and initiatives Global private labor standards Buyer codes of conduct Industry standards and labels Multi-stakeholder standards and labels International framework agreements Audit regimes Buyer audits Third-party audits Buyer-supplier cooperation -Activities of buyers offering support to suppliers (e.g. capacity building) Barrientos and Smith (2007); Bartley and Egels-Zandén (2015), Christian (2017), Donaghey et al (2014); He and Perloff (2013), , Locke and Romis (2010); Nadvi and Wältring (2002); Oka (2010), Porteous et al (2015); Sartor et al (2016), …”

Social Clause in Trade Agreements and China’s Experience

“…Six other FTAs were signed including US-Australia, US-Bahrain, US-Chile, US-Morocco, US-Singapore and Central American Free Trade Agreement respectively (Siroën, 2013), which resemble to the US-Jordan FTA despite the main difference on the existence of an independent tribunal in which dispute can be settled and a fine of a maximum of 15 million dollars a year may be imposed in the event of incompliance (Siroën, 2013). In addition, these FTAs explicitly included ILO's Declaration (1998) of which principles has been proliferated (Alston, 2004).…”

Regional Trade Agreements with Labor Clauses: Effects on Labor Standards and Trade

“…Rodrik (1996) and Dehejia & Sammy (2004) examine the effects of labor standards on a country's export per GDP using a variety of labor-condition measures for a large number of countries. 33 They also include measures of a country's labor and human-capital endowments as other potential determinants of the country's comparative advantage. 34 They find that a country's export performance is well explained by its factor endowments, but not by the level of its labor standards.…”