Academic journal article International Journal of Labour Research

The Lessons from Trade Agreements for Just Transition Policies

Academic journal article International Journal of Labour Research

The Lessons from Trade Agreements for Just Transition Policies

Article excerpt

A low-carbon economy is characterized by high energy efficiency, reduction tof emissions and all forms of contamination and waste, the generation of renewable energy, and the regeneration of exploited resources. Scientists have repeatedly warned that the time for the transition to such an economy is limited.

This article looks at the experiences of countries with trade liberalization and related adjustment processes so as to draw lessons for a just transition agenda. Like the transition to a low-carbon economy, trade liberalization can have severe impacts on societies. Most notably, it has had impacts on employment levels (both job creation and job destruction), the quality of employment (wages and working conditions, precarious work and subcontracting) and production structures (specialization patterns), and it has also had social impacts (unemployment and reallocation of jobs).

In the first section, we look at how trade liberalization has affected workers and employment. It has variably led to displacement, unemployment, underemployment and reallocation of jobs; and to equally variable results with regard to wages and working conditions. The section further looks at the impact of trade opening on structural transformation in countries and how trade liberalization has promoted certain types of production structures and specialization patterns. The role of trade unions in assessing impacts of trade liberalization and their engagement in the trade debate is also highlighted in this section. Some lessons for the just transition agenda are drawn.

The second section focuses on policies that have been or can be used successfully to address the employment impacts of trade opening, such as policies on skills, social protection and labour standards, while drawing some lessons for the just transition process. It emphasizes the importance of employment impact assessments and social dialogue in the trade debate, as well as the importance of policy space, in particular for industrial policies which are needed for structural transformation. The role that trade unions have played in advocating for such policies will also be highlighted. This section also draws lessons on the need for policy space for the transition to a low-carbon economy. We argue for a sustainable or green structural transformation, and the set of policies needed to achieve this.

In the third section, we look at some specific areas of the trade agenda that might impact on the available policy space for the just transition agenda, such as the protection of intellectual property rights (IPRs), environmental goods negotiations, subsidies and other policy tools. Some general conclusions are drawn at the end.

Like trade liberalization, which is often accompanied by significant shifts in employment and adjustment costs, the transition to a low-carbon economy will result in economic restructuring. When concerned with trade liberalization, the conventional discourse assumes that the gains created by open trade far outweigh the costs. Another commonly held belief is that the adjustment periods are short and that the economy rapidly finds its pace again.

Conventional theories of trade arching back to Ricardo assumed that when trade opens between two countries, different sectors benefit from market access and that job creation in those sectors absorbs the labour shed from the sectors that have shrunk. The firm heterogeneity model (or "new new" trade theory) shifted academic attention from what happens to different economic sectors when two economies liberalize trade to how specific firms perform within the sectors after the opening occurs. The firm heterogeneity model accommodates the findings of theoretical models, that trade always has positive long-term employment effects, with the findings of empirical studies that trade opening has often led to job losses overall.

Employment and labour market impacts

Liberalizing trade involves the removal of many quantitative (tariffs) and qualitative (non-tariff) barriers to trade. …

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