Friday, March 23, 2012

Child labour, International trade rules and WTO

I had blogged here about the relationship about child labour and international trade rules. The WTO is faced with the constant question as to whether it should tread into non-trade domains like the environment, labour issues and human rights. Those in favour argue that the multilateral trading rules must support and espouse universal labour standards, human rights and environmental standards as a part of a liberalised, fair trading regime while those opposing argue that the WTO is not the right fora for this discussion and inclusion of these issues would infringe on legitimate domestic policy space.

I found this interesting piece in the NYT blog regarding the relationship between child labour and trade.
"In my Economic Scene column on Wednesday I discussed how anti-sweatshop campaigns in the West to improve the lives of workers toiling in dismal conditions in the third world often do more harm than good — turning low-wage workers into no-wage workers by inducing multinational companies to pick up shop and move somewhere else.

Child labor offers perhaps the best example that big improvements in the workplace are always driven from pressure from within. Banning imports of products made by minors might make the people of San Francisco happy, but it has done very little to improve the lot of poor children overseas.

“There is very little evidence supporting any connection between trade and child time allocation other than through the impact of trade on the living standards of the very poor,” writes Eric V. Edmunds, an economist at Dartmouth College who directs the Child Labor Network at the Institute for the Study of Labor."
It essentially argues that a ban on trade in products based on child labour would do more harm to those families who are engaged in child labour than address their issue by forcing the children to work in areas not covered by trade or by losing out on employment.

Another piece titled "Child labour: Is International Activism the solution or the problem?" questions the effectiveness of imposing international labour standards to address the issue of child labour. Arguing that stronger domestic policy action is required to tackle the problem, it states:
"Our findings question the effectiveness of current international pressure tactics, such as consumer boycotts or imposing international labour standards, in reducing child labour in the long term. Since such policies also carry short-term costs for developing countries, the rationale for their use should be reconsidered.

The international community still can, and should, help address the child-labour problem in developing countries. We are critical of interventions that work through restricting trade. Such policies have the potential to displace working children into informal employment, with negative repercussions for the prospects for future political reform. A more promising alternative would be policies that reward parents for choosing education over child labour for their children (a successful example of this sort is the PROGRESA program in Mexico). Such policies reduce economic dependence on child labour without inducing detrimental displacement effects. Likewise, policies that create incentives for developing countries (e.g., through conditional aid) to restrict child labour anywhere in the economy (rather than just in the export sector) would be useful, although these may be difficult to enforce."
Kaushik Basu and Homa Zarghamee in this paper have argued that product boycotts on the grounds of the use of child labour can be counterproductive. 

Should the WTO get involved in multilateral trade rules espousing labour standards that can be enforced through the dispute settlement mechanism? Would this be counter productive? Would this be "protectionism" through the back door? While there is no question that strong national policies should be in place to address the menace of child labour, is internationalisation of enforceable rules to ban child labour an answer? With the Doha round at a stalemate, I don't see this issue gaining precedence. However as a principle of the contours of multilateral trade law, the issue of "non-trade" matters being considered is still a very live debate.


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