International Trade and Worker Rights

INTERNATIONAL TRADE AND WORKER RIGHTS Steve Ckamovâz UNKING WORKER RIGHTS TO INTERNATIONAL TRADE is not a new idea. Its roots stretch back into the nineteenth century in both Europe and the United States. The earliest congressional attention to the issue came in 1890, when the McKinley Tariff prohibited imports manufactured by convict labor. Despite this long history, the rapid reemergence of worker rights as an issue in U.S. trade policy in the last few years has surprised trade and labor experts alike. Consider how quickly events have moved. Since 1983 the U.S. government has applied a labor standard to four trade or investment laws: in 1983, to the Caribbean Basin Initiative (CBI); in 1984, to the Generalized System of Preferences (GSP); in 1985, to the Anti-Apartheid sanctions against South Africa and to the operations of the Overseas Private Investment Corporation (OPIC). In 1986, the U.S. House of Representatives passed the Trade and International Economic Policy Reform Act (H.R. 4800), which would make the denial of "internationally recognized worker rights" by foreign governments an unfair trade practice subject to possible U.S. countermeasures.1 Used in the context of international trade, the term "worker rights" is of recent vintage. In the nineteenth century the issue of unfair competition stemming from the poor conditions of foreign employment was known as the "pauper labor" problem. At the World Economic Conference of 1927 this export practice was termed "social dumping." When the Charter of the International Trade Organization was completed in 1. H.R. 4800, 99th Cong., 2d sess., 22 May 1986, Section 112 (5). Steve Charnovitz is an international relations officer at the U.S. Department of Labor. He has recently written on international trade issues for theJournal of World Trade Law and the California Management Review. The views expressed here are not necessarily endorsed by the Department of Labor. 185 186 SAIS REVIEW 1948 under United Nations auspices, it included a special article under the rubric of "Fair Labor Standards." Although the transformation of the longtime concern about foreign working conditions into an assertion that all workers possess certain "rights" is a decidedly contemporary approach, the ideals invoked by these different terms have remained fairly constant over the years. Basically, there are two motivations behind worker rights. One is the argument that domestic workers should not have to compete against foreign goods produced by coerced or sweated labor. The other is the belief that improving conditions of labor will advance social justice. While the emphasis placed on these motivations by worker rights advocates has shifted over the years, both ideals have always been present. WHY HAS THE ISSUE OF WORKER RIGHTS suddenly achieved such prominence in U.S. trade policy? Mainly because worker rights stands at the nexus of two very important issues — unfair trade and human rights. First the trade problem: The mushrooming trade deficits of the mid-1980s and the concomitant increase in U.S. industrial unemployment have necessitated an examination of the factors that give foreign countries their competitive edge. One obvious factor is that many of these countries have the advantage of very low labor costs, often less than 15 percent of U.S. wages. While lower labor costs established by a free market might be viewed as a legitimate comparative advantage, some of these foreign wages are, in reality, set by government policies that ban unions or otherwise inhibit workers from seeking a just wage. Moreover, while U.S. manufacturers are bound by certain minimum standards for child labor and employee hours, foreign competitors are sometimes free to extract whatever toil they can from whoever will provide it. Unfair or repressive labor laws can thus confer real benefits to foreign producers. Implicit subsidies in the form of unfair labor standards can make exports as artificially advantageous as do explicit subsidies, such as low-interest loans or export rebates. Yet while these subsidies are punishable under U.S. trade law through the imposition of countervailing duties, labor subsidies are not. Conversely, the suppression of local labor costs can effectively protect the domestic market by making home goods artificially cheap. Repressive labor laws can thus serve as a type of nontariff barrier. The...