- Labor Standards in the Globalized Economy: The Inclusion of a Social Clause in the General Agreement On Tariff and Trade/ World Trade Organization
This article was prompted by a collection of essays published by the International Institute for Labour Studies (IILS) at the International Labour Office (ILO) in Geneva in October 1994. 1 The publication, International Labour Standards and Economic Interdependence, forms part of the IILS’s work on the role of labor standards in economic development, as well as the ILO’s commemoration of its seventieth anniversary and the fiftieth anniversary of the Declaration of Philadelphia.
One of the main themes focussed on in the essays is “Labour Standards and International Trade,” which revolves around the potential inclusion of a social clause in the GATT/WTO. Based upon the contributions of noted trade unionists, academics, and members of employers organizations and governments, it is clear that most employers and developing country governments regard a social clause as disguised protectionism, that would [End Page 443] be aimed at cost-equalization. On the other hand, trade unionists and industrialized country governments argue that this is not the case. Rather, a direct link between the liberalization of trade and the spread and enforcement of fundamental standards is aimed at eradicating the most flagrant violations of working and living standards in all countries and sectors.
The ILO is also reluctant to take a stand on the social clause, because of a disagreement within the ILO over the contents of such a clause, as well as fear that, in pursuing the social clause jointly with GATT/WTO, the ILO would depart from its principles of volunteerism and political suasion.
This article tries to identify common ground between the antagonists and protagonists that could serve as a starting point to identify the aims of a social clause, its enforcement, and the role of the ILO in pursuing the matter. This is necessary because there are numerous misunderstandings in this regard, some that might even be deliberate. In order to give a clear picture, reference is also made to the historical background and the normative debate raging between “fair” and “free” traders. However, these elements do not form the focal point of evaluation.
II. Historical Background
The desire to establish links between international trade and labor standards is as old as the standards themselves. Jacques Necker, the banker and finance minister under Louis XVI, wrote in 1788 that if a country were to abolish the weekly day of rest, it would undoubtedly gain an advantage, provided it was the only one to do so; if others acted likewise the situation would be as before. 2
Since then, there have been many developments. During this century, questions about the links between labor standards and international trade resurfaced, in particular when the European Common Market was established and the removal of customs led to fears that the labor component might retain more importance in the calculation of the final cost of a product. In the mid-1950s, analyses and discussions followed on the social aspects of European economic integration, with the same concern to the fore. 3
References to fair labor standards in the form of commitments are found in a number of international agreements on raw materials (Article 28 of the 1987 agreement on sugar and Article 45 of the 1981 agreement on tin, to [End Page 444] name just two). 4 In 1980 the Brandt Commission recommended that fair labor standards should be internationally agreed upon “in order to prevent unfair competition and to facilitate trade liberalization.” The issue was also vibrant in the United States, which has introduced provisions into its legislation linking the grant of trade privileges to foreign countries with respect to minimum workers’ rights. Both the Caribbean Basin Initiative (CBI), which provides for preferential tariff access to the United States market for goods from countries in the Caribbean area, and the Generalized System of Preferences (GSP) include references to workers’ rights in the exporting country. 5 The same concern accounts for the 1993 “side deal” on labor conditions negotiated in the context of the North American Free Trade Agreement (NAFTA). 6
Another type of social clause...