Ramifications of 'Social Clause' in International Trade Agreements

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Fasihul Karim Siddiqui (47), General Manager, Personnel & Administration in Hinopak Motors Ltd., is widely known among professional circles for his expertise in Labour Laws and Industrial Relations. Mr. Siddiqui presented this paper at the meeting organised by Quaker, United Nations.

A recently held meeting at Geneva organised by the Quaker United Nations office focused on International trade and labour standard linkages and discussed benefits, costs and alternatives in diverse perspectives with a view to objectively analyze the issues involved. In the following we will summarise some of the major-issues deliberated in the meeting:-

i) Tracing economic linkages between international trade, labour markets and standards, it was suggested that raising labour standards had its affect on trade as a vehicle' of economics creating growth and employment. Based on such linkages, introduction of "labour standards" into the international trading system was proposed with the argument that "social clause" should be incorporated in GATT agreements stipulating that all member states must undertake to respect a specified list of labour rights and standards so that no country may establish a competitive advantage over their trading partners by violating these rights.

ii) Considering as to which of the international labour standards could be singled out for inclusion in the 'social clause", the following were pointed out:

(a) Convention No. 87: relating to Freedom of Association,

(b) Convention No. 98: relating to the right to organise and bargain collectively,

(c) Convention No. 138: relating to minimum age for employment of children,

(d) Convention No. 111: relating to freedom from discrimination in employment and occupation,

(e) Convention No. 29 & 105 relating to freedom from forced labour,

(f) various countries relating to occupational safety and health.

iii) Deliberating on the machinery for the enforcement of the 'social clause" and the present inadequacy of the institutional framework, it was pointed out that the ILO which was responsible for developing international labour standards though its typical tripartite machinery was the prosecuting authority for violation of these standards by member states ratifying them but had no authority to impose trade sanctions on member states hads no authority to prosecute them for violation of labour states. However, the proposal that the inclusion of 'social clause' in the international trading agreement will manpower GATT to impose sanction on such members who violate the social clause so that .efforts to promoting trade growth may complement the need to raise and protect labour standards.

While discussing various aspects of the proposal for a 'social clause' basically initiated by the US, Mexico and the workers bloc, the following ramifications need to be taken into account:

i) A mention in the preamble of the GATT about raising standards of living ensuring full employment and the growing volume of real income and effective demand is clearly indicative of the social harmonization achievable through regional economic integration but the same cannot be construed to impose any restriction to free trade in the name of workers rights.

ii) By proclaiming the objective of "optimum use of the world's resources in accordance with the objective of sustainable development", the preamble to the Agreement establishing the WTO already defines the rights and obligations of members and leaves no room for creating new obligations particularly at the time when the international trade system has not yet been consolidated enough to sustain the effect of substantial changes stipulated by the liberalisation efforts.

iii) With the labour dimension virtually absent from the basic instruments on the liberalisation of trade i.e., GATT and agreement establishing WTO, the constitution of ILO also does not contain any such mandate whereby the rules of international labour law aimed at ensuring workers' free determination may be incorporated in international trade law. …