Tricky Trade Balancing Act

By Morici, Peter | The International Economy, January 2001 | Go to article overview

Tricky Trade Balancing Act


Morici, Peter, The International Economy


A way for WTO members to protect workers' rights and promote economic development.

It its 1999 Seattle meeting, the World Trade Organization (WTO) failed to launch a comprehensive round of multilateral negotiations because members could not agree on an agenda. For example, the United States and European Union (EU) would like talks on workers' rights and environmental standards, but they are opposed by developing countries. The EU is seeking a competition policy agreement but is opposed by the United States. Many developing countries would like to roll back Uruguay Round commitments regarding intellectual property but are opposed by the United States.

The purpose of the WTO is to promote trade that raises incomes and growth in both industrialized and developing countries. Workers' rights is just one area where some governments see stronger international rules as enhancing the benefits of globalization, while others view them as threatening their development prospects.

For each contentious issue, governments should ask:

Can members agree on standards for national governments' policies and practices?

Would better compliance with these standards promote trade that raises incomes and growth?

Are violations of these standards significantly affecting trade?

Would applying WTO dispute settlement to complaints about derogations from these standards promote trade that raises incomes and growth?

Is the WTO the most effective forum for these problems?

Since 1948, the WTO system has evolved from the General Agreement on Tariffs and Trade (GATT), which focused on tariffs and quotas, into a capacious system of public international law, regulating many aspects of national industrial policy having international competitive consequences. Although the legal protections workers enjoy in one or several countries can have a major impact on the competitiveness of industries and workers in other countries, no WTO agreement addresses the general rights of workers, such as the right to unionize.

In parallel, a system of international human rights law has emerged that obligates governments to protect civil, economic, and social rights. In this context, certain "core workers' rights" or "core labor standards" have achieved near universal recognition, as witnessed, for example, by the near universal government participation in the 1948 UN Declaration on Human Rights, and the 1998 International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work and surveillance program. These rights are: the prohibition of exploitative forms of child labor, forced labor and discrimination in employment, and freedom of association and collective bargaining.

Eight ILO Conventions address these core rights in specific detail; however, many nations have not ratified all of them. The United States, Canada, China, India, Japan, Korea, and Mexico have not ratified Conventions in at least two of the following areas: minimum age for employment; forced labor; nondiscrimination; and freedom of association and collective bargaining. These governments embrace the goals of these Conventions, as evidenced by their participation in the above referenced agreements, but often they do not agree with the specific means required by these Conventions. Hence, core labor standards could not be addressed in the WTO by importing these eight Conventions into a WTO agreement, or conditioning WTO rights on compliance with these Conventions.

At least 120 million children between the ages of 5 and 14 in developing countries are fully at work. About 12.5 million are in export industries. This approximately equals the number of workers in industrial-country textile and leather goods sectors--export industries where child labor is most prevalent.

Concerns about forced labor focus mainly on unpaid prison labor and bonded labor. A 1996 Organization for Economic Cooperation and Development (OECD) study cited such practices as prevalent in China, India, Pakistan, and Brazil. …

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