The International Public Policy Debate
That there has been a long-standing debate over the linkage of workers rights to international trade agreements is well known. Opponents - principally the developing countries, including China, but also many employers and employer organizations - contend that any such linkage would jeopardize legitimate `comparative advantages' of developing countries and thus impair their export trade - one of the best weapons for improving economic performance and alleviating poverty. Neoclassical economists, as well as many lawyers and trade policy analysts, largely agree. Their contention is that proponents of the linkage use human rights and other moralistic arguments to further a protectionist agenda.
Proponents of the linkage advance a number of counter-arguments, the most prominent of which is that a set of core labour standards - the right of association and free collective bargaining, the prohibition on the use of forced or compulsory labour, the abolition of child labour, and the elimination of discrimination in employment and occupation - can be adopted without impairing the pace of economic progress in developing countries or elsewhere. Those who resist the adoption of core standards are accused of `social dumping.' It is argued that the core rights or standards may be distinguished from specific entitlements - wages, vacation and holiday pay, hours of work, health and safety standards, and the like - that, because of their substantive nature, would be difficult, if not impossible, to harmonize on a global basis, given the widely disparate states of development of the roughly 200 nation states now participating in international commerce. Some proponents of linkage also contend that violations of core labour standards are so manifestly unacceptable, on moral and humanitarian grounds, that compliance should be a threshold condition of entry into any rules-based system of international trade such as the World Trade Organization (WTO).
The Canadian System (1)
Before turning to the way in which Canada and the international community are dealing with this fundamental dispute, a brief description of Canada's labour and employment law system might be helpful. In Canada, legislative jurisdiction over labour policies is constitutionally divided between the federal government and provincial and territorial governments. (2) The federal government has jurisdiction over labour and employment matters in airlines, railways, broadcasting, banking, inter-provincial transport and grain handling, as well as the federal public sector. It also controls unemployment insurance by virtue of a constitutional amendment. Other industries and sectors, covering approximately 90 per cent of Canadian workers, fall under provincial jurisdiction for all labour and employment-related purposes, including collective bargaining, health and safety, general labour standards legislation, and human rights.
The Canadian collective bargaining system is based on the United States Wagner Act (1935). Despite the interdependent labour and product markets between Canada and the United States and their similar economic structures and close institutional ties, the operation and impact of collective bargaining laws have been generally more favourable to workers and unions in Canada. Although there has been some decline in Canadian trade union density as a percentage of the non-agricultural workforce - it is still in the 30 per cent range - the decline has been marginal in comparison to the United States, where union density has dropped from approximately 30 per cent in the 1960s to under ten per cent today. The differences between Canadian and American collective bargaining laws lie more in their administration than in their substantive features, although Canada's rules relating to union organizing are generally more favourable to unions, as are its remedies for unfair labour practices. The Canadian system of collective bargaining is highly decentralized and by and large is based upon individual and plant-specific bargaining units. There is, in general, little support, legal or otherwise, for industry-wide or sectoral bargaining.
The political characteristics of the mainstream Canadian labour movement are more similar to European collectivist movements than to the business unionism prevalent in the United States. The Canadian labour movement tends to be socially active and partisan in politics, while the American movement, led by the AFL-CIO, operates without a clearly articulated social philosophy. Canadian jurisdictions have more highly developed and regulated legislative provisions on employment standards (that is, minimum wages, hours of work, termination notice, severance pay, and so on). Some Canadian jurisdictions have moved further in newer standards areas, such as pay equity.
Finally, virtually all primary adjudication related to labour and employment matters is vested in various quasi-judicial boards, agencies, and commissions. This is true for collective bargaining and related matters, employment standards, occupational health and safety, and human rights. The role of Canadian courts is limited to judicial review. In exercising their review powers, the courts are concerned in the main with whether the particular tribunal under review has exceeded its jurisdiction, in which case its decision will be set aside. Otherwise, the court usually defers to the decision of the relevant specialty tribunal. Where an employment matter is not covered by statute - for example, individual contracts of employment in non-unionized work settings - the courts are called upon to deal with claims for wrongful dismissal, where common law principles are applied.
International Efforts to Address the Labour/Trade Linkage Dispute
For many years, little progress has been made in resolving the two divergent trade/labour linkage positions outlined above. However, in the past few years there have been clear and encouraging signs that the two polarized positions are converging, at least insofar as the mainstream participants are concerned, and that a formula and forum for reconciliation is taking shape. Central to this convergence is a reinvigorated International Labour Organisation (ILO) (3) under the leadership of its director general, Juan Somavia, formerly Chile's ambassador to the United Nations and chair of the seminal World Summit for Social Development in Copenhagen in 1995. (4)
On 18 June 1998, the ILO conference in Geneva adopted the Declaration on Fundamental Principles and Rights at Work, in which all four core labour standards referred to above were endorsed by ILO member states, including Canada. In May 2000, the ILO issued Your Voice at Work, its first follow-up report on the declaration, which dealt with progress on the first core standard, that is freedom of association and the right to free collective bargaining. (5) The report makes two references to Canada relative to collective bargaining and freedom of association:
* Some jurisdictions in Canada deny domestic workers and those employed in agriculture the right to organize. Some also deny various categories of public servants the right to organize and/or to withdraw their services in pursuit of labour objectives.
* Canada has ratified ILO convention 87 (freedom of association) but not convention 98 (collective bargaining). (6) China and the United States have ratified neither, although they submit annual reports on both.
From these citations, and from the report as a whole, it is clear that the ILO has all member countries under close scrutiny with respect to convention compliance. It is also clear that no member is in full compliance with all of the ILO's conventions, which now number over 175. Most importantly, the implication from the report is that, of the many international supervisory bodies, the ILO, with the apparent concurrence of those of its members who are also WTO members, is currently the organization of international choice for the task of monitoring compliance with the core labour standards, as set out in the 1998 Declaration on Fundamental Principles and Rights at Work.
Nonetheless, some countries, notably the United States, supported by France, Norway, and some other states, continue to contend that the WTO should concern itself with labour standards and their observance. At the WTO's millennium Seattle ministerial meeting, the United States caused a working group to be convened to discuss labour issues. I am advised that approximately eight countries participated, including the United States, Canada, India, and some other developing countries. Costa Rica chaired the group. No conclusions were reached, and the working group was dissolved and is not part of the ongoing structure of the WTO. At Seattle and subsequently, the Canadian government's position has been that labour issues are complementary, rather than directly related, to trade agreements. Canada is working within the ILO to see that the core labour standards are addressed in a systematic way and that, through technical assistance, training, filing annual reports, and encouragement and moral suasion, developing countries, including China, are persuaded to improve their labour standards. (7)
Canada believes that significant progress has been made over the past five years. The adoption of the Declaration on Fundamental Principles and Rights at Work in 1998 is seen as a watershed. Canada fully supports the reinvigorated ILO and its work in monitoring compliance with the core labour standards set out in the convention. In addition, Canada supports informal multi-institutional cooperation and dialogue among the ILO, the WTO, the World Bank, the United Nations Conference on Trade and Development (UNCTAD), and others to exchange information and co-ordinate initiatives relating to labour standards in the context of global commerce. Canada does not advocate compliance with the core labour standards as a condition of entry into the WTO, nor does it advocate trade sanctions for non-compliance. However, this position should not be construed as sanctioning contravention of the standards. Rather, Canada asserts that compliance can best be achieved by the voluntary mechanisms now in place under the ILO, augmented over time by co-operative dialogue with other international organizations, as referred to above. As for the WTO, Canada takes the position that it should be alert to the labour-related issues arising out of the implementation of the various provisions of the GATT/WTO regime (8); that these should be brought to the attention of the ILO; and that the WTO should be prepared to join with the ILO, where appropriate, in a dialogue with the offending side to encourage compliance. (9) The WTO undertook a similar role related to the restructuring of emerging economies, and Canada believes that there is no reason, in law or in logic, why it should not take the same analytical, investigative, and persuasive approach, in collaboration with the ILO, on labour standards issues.
In 1999, the UN secretary general initiated the `Global Compact' between the UN and the world business community. Under the compact, the private sector is encouraged to support a set of core values covering labour, the environment, and human rights `in an effort to give a human face to the global economy.' The International Organization of Employers (IOE) has been an active supporter of the Global Compact initiative and has urged all employer organizations to embrace it. The International Confederation of Free Trade Unions (ICFTU) is also a partner in this initiative. Under the Global Compact, the following references are made to human rights and labour.
Human Rights: Businesses should support and respect the protection of internationally proclaimed human rights within their sphere of influence and make sure that they are not complicit in human rights abuses.
Labour: Businesses should uphold the freedom of association and effective recognition of the right to collective bargaining; all forms of forced or compulsory labour should be eliminated; child labour should be abolished; and discrimination in respect of employment and occupation should be eliminated.
It should be noted that the Global Compact is a United Nations initiative. Although no government has taken any position on its substantive provisions or been involved in its design or implementation, it has been suggested that the compact should be the subject of serious and focused discussion within the ILO and in any discussions between the ILO and other international institutions, including the WTO.
Canada's Trade Agreements and Labour Standards
Canada has bilateral free trade agreements with Israel and Chile. There is a labour side agreement (LSA) with Chile similar but not identical to the LSA under the North American Free Trade Agreement (NAFTA), the only multilateral trade agreement, other than the WWO, to which Canada is a party. NAFTA's LSA requires each country to enforce its own labour laws. It refers specifically to the promotion of compliance through inspection, record keeping, and sanctions for violations of internationally recognized labour standards (the `core' standards) the `guiding principles' that each party is committed to promote in accordance with domestic laws. The LSA sets up a formal dispute settlement procedure for the resolution of disputes concerning any alleged lack of enforcement of United States, Canadian, and Mexican domestic labour laws. If a contravention is ultimately found to have occurred, the principal sanction is a monetary fine. Any affected or interested party - Canadian, Mexican, or American - may raise a complaint before its own national administrative office. In the United States, unions have raised complaints about interference with freedom of association in Mexico. Two early examples involve complaints by the United Electrical Workers and the Teamsters against two large multinational corporations. In both cases, the US National Administrative Office dismissed the complaints and did not recommend that they be sent on for ministerial review under the LSA.
An American automotive parts manufacturer with a Canadian subsidiary was named in a complaint by Canadian and Mexican unions. In Canada, the complaint, which came to the LSA's Canadian Administrative Office, alleged that an independent union, attempting to organize the company's Mexican operations, was intimidated by a rival state-sponsored (and employer-supported) Mexican union. There was also a health and safety complaint related to the company's use of asbestos fibres in brake pads. Hearings were held in Canada by the Canadian Administrative Office, and, as a result of adverse evidence adduced against the company, the matter was referred to the Canadian and Mexican ministers of labour for consultation. In the meantime, the Asbestos Institute has gone to the Mexican plant to offer assistance. It is alleged that Mexico was complicit in the health and safety matter in that it did not send health and safety inspectors to investigate the health concerns expressed by the workers.
* Unlike the United States, (10) Canada has no domestic laws linking trade or other commercial issues to compliance, by foreign states, with labour standards. (11)
* Early ILO conventions made exceptions for states at different stages of economic development - in particular, India and Japan. More recent ILO conventions contain `flexibility clauses' that take account of the varying stages of economic development of member countries in relation to standards and compliance. Nonetheless, the ILO has emphasized that differences in economic development should not excuse violation of the core standards.
* The United States has ratified only 13 ILO conventions. This places it amongst those who have ratified the fewest conventions - a fact that has elicited both national and international criticism, especially in view of its strong advocacy of linking workers' rights and trade within the WTO and the US legislation previously referred to.
* It would be naive and unrealistic to claim that there is broad and unqualified acceptance of the virtues of collective bargaining for establishing wages and working conditions. Since capital has now acquired the option to exit and cross over national boundaries virtually at will, there is an increased possibility that freedom of association in collective bargaining will come under renewed attack. The regulatory and institutional practices of collective bargaining are seen by some as creating costs and imposing impediments to flexibility and competitiveness in the global market place. To attract foreign investors, some jurisdictions, Ontario included, have moved to curtail or restrict bargaining rights and freedom of association.
* Trade, Employment and Labour Standards: a Study of Core Workers' Rights in International Trade, an important document released by the Organisation for Economic Co-operation and Development (OECD) in 1996, deals in some depth, based on empirical evidence, with whether collective bargaining is more efficient than other wage setting systems. It concludes that productivity improves in a properly functioning collective bargaining regime and that `there is a mutually supportive relationship between trade liberalization and the rights of association and collective bargaining.' Still, many employers remain sceptical and some harbour concerns about wage distribution aspects of collective bargaining; even if the system results in greater productivity, it may also result in higher wages and lower profits, with consequent impairment of competitiveness. The counter-argument is that employers, particularly those wishing to invest in developing countries, may well be ready to accept higher costs in exchange for political stability, adequate infrastructure, domestic demand for the relevant goods and services, and an industrial relations system that functions well.
* There are other systemic factors putting strains on the traditional collective bargaining systems. The restructuring of production by firms so that they can concentrate on core activities and the wide-scale privatization of public facilities (in developed countries) and state enterprises (in developing countries) have reduced the size of production units and led to outsourcing of much work previously done by in-house staff. This has led to more contract and part-time work, with attendant problems for unions in their organizing efforts. There has also been a rapid growth in the informal economy (household enterprises without permanent employees and enterprises employing only one or two employees). In Latin America, 80 per cent of new jobs created in the last surveyed period (1990-4) were in the informal economy.
Many in the developing countries, as well as workers in traditional occupations in industrialized countries, are increasingly of the view that the process of globalization in the world trading system is stacked against them. This social backlash has been manifested in the streets of Geneva, Seattle, Washington, Vancouver, Davos, Windsor, and elsewhere. If confidence in the liberalized global trading system is to be restored, respect for freedom of association and collective bargaining rights is one mechanism for reassuring workers, wherever located, that their voices will be heard and that they are entitled to their fair share of the fruits of globalization.
Much attention has been paid to the role of macro-economics, including policies aimed at deficit and debt reduction, in maintaining economic stability. However, equally important are the social fundamentals, as set out in the ILO's Declaration on Fundamental Principles and Rights at Work. As globalization proceeds, it is critical that this social dimension be properly integrated into the evolving system. Part of this process involves recognition of the importance of the rule of law and due process. Rights are empty without a fair, objective, and impartial judicial process to ensure that they are enforced, especially with respect to freedom of association and the right to bargain collectively. As the ILO has put it: `Any administrative or other requirements which are pre-conditions for freedom of organization should be of a purely formal nature ... and should not allow arbitrary or discretionary powers to deny the formation or administration of freely chosen organizations.'
* Proponents of linking labour standards to trade, to the extent that their arguments are based on human rights or civil liberties grounds, are open to the change of hypocrisy; few, if any, nations can lay claim to an unblemished record in protecting human rights. For that reason, any human rights-based argument should be applied universally. Otherwise, there is force in the contention that a double standard is being applied and that the real motive for pursuing labour standards may be to disguise a protectionist agenda. The counter-argument is that there is a hierarchy of `culpability' in assessing human rights violations - hence the delimitation, in defining labour rights, in the ILO's 1998 declaration, to `core labour standards' that ILO members deem to be absolute.
Summary and Conclusions
The debate between the proponents and opponents of linking labour issues to international trade rules has, until recently, been dominated by extremist ideological rhetoric. The attribution of motivation - `disguised protectionism' by the proponents and `social dumping' by the opponents - polarizes the discussions, making pragmatic solutions more difficult.
Trade and labour interests clearly intersect in an increasingly globalized marketplace and cannot be dealt with in isolation. However, given the vast differences in economic development amongst the multitude of nations participating in international commerce, it is quite unrealistic and wholly undesirable to contemplate the global harmonization of detailed labour standards.
Until recently, international organizations have not been responsive or sensitive enough to the urgent need to address the growing sense of disillusion, alienation, exclusion, and, in many instances, deprivation by those most affected by the debate - the workers. The consequence is evident in the streets when the bodies responsible for designing the rules of economic globalization meet, whether in Seattle or Vancouver, Washington or Davos. Unless the voices of the workers and their representatives are heard and heeded, there are real risks of continued immobilization, if not breakdown, in efforts to advance the system. Few wish to contemplate the consequences of a return to protectionism - national or regional - much less a `race to the bottom' in terms of standards in an effort to capture market share. The `beggar-thy-neighbour' approach has surely been fully discredited by the policies adopted in the 1930s at the time of the Great Depression.
Canada's position - that labour standards are complementary to trade agreements in general and to the WTO/GATT regime in particular - is fully compatible with the milestone commitment of all ILO member states to the 1998 Declaration on Fundamental Principles and Rights at Work. Under the leadership of a reinvigorated ILO, every effort should continue to be made to ensure that all member states are in substantial compliance with the declaration's minimum standards by 2003, the year in which the final global report (dealing with discrimination in employment and occupation) will be issued by the ILO's director general.
In the meantime, while the ILO has a leadership mandate, the other involved international organizations - the UN (through UNCTAD), the WTO, the World Bank, the Asian Development Bank, the International Monetary Fund (IMF), the OECD, and perhaps others - should co-operate fully with the ILO, through the exchange of information and ideas and the co-ordination of activities, to accelerate progress on the labour front and to enable the 2003 target for compliance with the core labour standards to be met.
Active support and constructive input from the International Confederation of Free Trade Unions (ICFTU) and other international and domestic labour organizations and leaders, from whom an admixture of persistence and patience will be required, is critical to the success of these co-ordinated promotional efforts. The same is true of the international and domestic employer organizations and their members, who need to look beyond the next quarter's profits and recognize the long-term benefits, in terms of productivity and otherwise, flowing from free, rational, and informed collective bargaining.
I would like to conclude with a personal observation. Twenty years ago, as deputy minister of labour for the Province of Ontario, it was my privilege to initiate a project involving regular tripartite discussions with leaders from business, government, and labour on a broad range of labour, trade, and economic policy issues. The initiative, aimed at breaking down communication barriers and opening the free flow of information and ideas amongst the principal social partners, had, for several years, a salutary effect on the labour and broader economic climate in Ontario and resulted in constructive compromises not only in collective bargaining but also on a number of important public policy issues. In time, however, more conservative elements in both the labour and employer communities came to regard this tripartite forum as inimical to their traditional partisan positions. Consequently, and by choice, they returned to the adversarial bargaining and ceased to meet on any systematic basis with government. Since then there have been no significant advances in promoting ongoing social dialogue.
I firmly believe that dialogue of this sort is even more important internationally than it is domestically. This, in essence, is what Canada and other like-minded ILO members are saying with respect to the difficult but not intractable issue of the relationship between labour standards and trade. Without continuous, persistent, and inclusive dialogue, little progress will be made. I sincerely hope that Canada's friends and colleagues share this view about the overarching importance of open and continuous communication on how trade and labour issues can be reconciled and indeed be made mutually reinforcing.
(1) The summary in this section relies heavily on the work of Brian A. Langille, `Canadian labour law reform and free trade' Ottawa Law Review 6(no 3, 1991), 581-622.
(2) Because of provisions in the Northwest Territories Act and the Yukon Act, the federal statute governing collective bargaining, the Canada Labour Code, applies to the territories. Generally, the administration of the territories is the responsibility of the commissioner acting on instructions from the Territories' Governing Council or the minister of Indian affairs and northern development. The authority of the commissioner and the Territorial Council includes the power to enact labour legislation. In the Northwest Territories, this includes the Apprentices and Tradesmen's Act, Fair Practices Act, Labour Standards Act and Wages Recovery Act. In the Yukon, the commissioner and Council have enacted the Human Rights Act, Apprentice Training Act, Occupational Training Act, and the Employment Standards Act. The federal legislation creating the new Territory of Nunavut on 1 April 1999 declares that Northwest Territories legislation will apply to Nunavut until the new territory passes its own legislation.
(3) The ILO, established in 1919 by part XIII of the Treaty of Versailles, and its adoption of multiple international labour conventions are key to the history of the relationship between workers' rights and trade. The founding documents of the ILO refer expressly to that linkage.
(4) The Copenhagen World Summit reaffirmed the ILO's Declaration on Fundamental Principles and Rights and Work: see United Nations, Report of the World Summit for Social Development (New York: 19 April 1995), commitment 3, 14ff. A follow-up summit is scheduled for New York in 2001 (`Copenhagen +5') to review progress over the last five years, including a review of compliance with the declaration.
(5) This is the first global report of the ILO following the 1998 Declaration. Three other reports will appear annually: on forced or compulsory labour (2001); on the abolition of child labour (2002); and on the elimination of discrimination in employment and occupation (2003).
(6) The reason given by Canadian authorities is that not all ten provinces in Canada's federal system are in full compliance with the letter and spirit of convention 98.
(7) The ILO constitution does not provide for sanctions for violation of its conventions (although they were originally considered); instead, article 33 refers to the possibility of `action deemed wise and expedient to ensure compliance.' In practice, the ILO relies on various forms of persuasion and moral pressure, along with training, data sharing, and technical and other forms of assistance.
Mr Armstrong is counsel to the law firm McCarthy Tetrault. He was formerly Ontario's Deputy Minister of Labour, Deputy Minister of Industry and Trade, and Agent General for the Asia-Pacific Region, stationed in Tokyo. He is a member of the Ontario Press Council and Chief Representative of the Japan Bank for International Co-operation. An earlier version of this article was presented to a Canada-Chinese judicial education seminar in Beijing in June 2000.
(8) The General Agreement on Tariffs and Trade (GATT) of 1947 has been amended in 14 subsequent negotiating rounds. The last of these negotiations, the Uruguay round, concluded in 1994. The Marrakech Agreement establishing the World Trade Organization marked the end of the round. It also created the World Trade Organization (WTO); hence the use of GATT/WTO throughout this article.
(9) The ILO and others have considered whether abnormally low social or labour conditions contravene existing provisions of GATT/WTO. The ILO's current position is that none of the potential `enforcement' mechanisms under GATT/WTO is desirable.
(10) Following the presentation of this paper in Beijing in June 2000, the US and Jordan signed the US-Jordan Free Trade Agreement (FTA) on 24 October 2000. For the first time ever, the text of a trade agreement contains provisions addressing trade and labour. The relevant provision ensures full enforcement of national labour laws and affirms the commitment of both sides to the ILO's core labour standards.
(11) A number of US programmes require compliance with `internationally recognized workers' rights' (undefined) as a condition of the granting of preferential trade status or aid: for example, the generalized system of preferences (GSP) under the Trade and Tariff Act (1984); the Caribbean Basin Recovery Act (1986); the Overseas Private Investment Corporations (Amendment) Act (1985); and the Omnibus Trade and Competitiveness Act (1988), which deals with section 301 sanctions.…