ILO, WTO and labour rights - Right forum?

Labour rights have been a contentious issue in the context of international trade. Should the WTO engage more actively in promoting fairer and better standards for labour right? Can countries be permitted to pursue an "aggressive" stand on labour conditions to the detriment of trade by countries having lower standards of labour rights? Is the WTO the right fora for these issues? Do the General Exceptions clause (Article XX) of GATT permit countries to impose measures that restrict trade on the grounds of labour conditions not being followed? Is maintaining labour conditions and removal of abhorrent practises like forced and child labour exclusively within the preserve of domestic policy space or does it spillover to international fora, particularly the WTO?

At the international level the International Labour Organisation (ILO) is responsible for overseeing and implementing labour standards. In a new report titled the "Giving Globalization a human face" the ILO has conducted a General survey that examines for the first time the challenges and successes in implementing all eight of its fundamental labour standards on freedom of association and collective bargaining, forced and child labour and discrimination in the workplace. The report is an exhaustive account of the status of labour rights implementation across the globe especially in relation to forced labour and child labour. Noting the role of the implementation methodology of the ILO system the Report concludes:

"Over the last 20 years, the Committee has noted hundreds of important cases of progress in law and practice on the application of ratified ILO Conventions, more than 50 per cent of which concern the application of the eight fundamental Conventions. These cases of progress are in part a direct result of the fact that a number of countries have achieved full democracy over the past decades and have developed systems and mechanisms to protect human rights. In this respect, the Committee welcomes the fact that the provisions of the fundamental Conventions and the principles of the supervisory bodies have been applied in a significant number of countries through the jurisprudence of the national courts. Much of this progress is linked, however, to the action of the ILO supervisory bodies (which include in particular the Committee of Experts on the Application of Conventions and Recommendations, the Conference Committee on the Application of Standards of the International Labour Conference and the Committee on Freedom of Association) and the action of the Office at headquarters and in the field, through technical cooperation and technical assistance. The ILO supervisory machinery is thus both relevant and effective, is a valuable tool for the development of decent work and is essential to guarantee the rights of employers and workers. This vital mission explains the increasing interest of the international community in promoting the rights contained in these fundamental Conventions and the significant resources dedicated to the ILO to achieve this strategic objective. Moreover, an analysis of the “cases of interest” noted by the Committee in its reports (which are a reflection of the positive steps taken by the authorities) highlights that a very high number of draft laws and policies are under preparation or already submitted to the national legislative authorities, more often than not as a result of the Committee‟s previous requests to this end. This trend illustrates the importance of tripartite dialogue at the national level in improving the application of the ratified Conventions, which in turn reveals the vitality and dynamism of the interaction between governments and the Committee."

With the ILO undertaking such steps to implement and supervise labour standards with the help of national governments, would it be reasonable to argue that the WTO is not the right forum to agitate issues of labour standards? Some argue that labour rights should be actively pursued in negotiations at the WTO. others view it as a "disguised" threat of protectionism and way of restricting trade from the developing countries. Are "universal" standards of labour rights all pervasive to justify intervention by the WTO? Would they be considered as imposing unreasonable restrictions on international trade?

WTO, labour standards and public morals

 
(Courtesy:Two young Bolivian girls give a piglet a bath before dressing him for dinner. / United Nations Photo / Jean Pierre Laffont.)


The issue of linking labour standards to international trade is a contentious one. The proponents of universal international labour standards and enforcement through international trade agreements argue that lower labour standards, including child labour, creates an unfair advantage to the countries using them and results in cheaper goods entering their markets endangering their products as well as labour. They argue that similar labour standards must be implemented across to avoid unfair competition and trade and propose that countries should be allowed to impose trade barriers when labour standards are not followed. The opponents of this view argue that labour standards are the domain of domestic governments and should not be linked to enforceable international trade agreements. While accepting that improvements in standards of labour is a compelling prerogative for countries its linkage to trade is a veiled attempt at protectionism by the developed world to protect their products and labour. They oppose any linkage with international trade and argue that the WTO  is no the right forum to take up this issue. I had blogged about child labour and trade issues in earlier blog posts here  and here .

The Boston Review  carried a piece  on this issue titled "Hype or Help - Globalisation and the fight over labor standards". It argued that the fight for better labour standards by the developed world would actually not benefit it to the extent that is normally believed.

" Now the issue of labor standards has become economically more momentous and politically murkier. The importance of the economic issue has grown in proportion to the exploding income gap between the world’s rich countries in the “North” and poor countries in the “South.” In the nineteenth century the divide in per capita income between England and its emulators was roughly 2:1. Today the comparable distance between the United States and the average developing country is on the order of 25:1. At the same time, technology and foreign investment are flowing more freely than ever from North to South, thereby evening out international differences in output per worker. As a result, employers can now hire high productivity labor in the South, at relatively low wages. And that represents a threat to the living standards of Northern workers.

This threat has mixed up the politics of labor standards. Conservative views about labor standards have remained the same—they propose to let the compensation of labor be fixed by market forces. But a geographical division has developed between the South and “progressive” or “internationalist” labor advocates in the North (mainly the United States). These advocates note the two-decade-long stagnation of real wages in the United States, and argue that important causes of that stagnation are low wages (in relation to productivity) and minimalist labor standards in late-industrializing, Southern countries. To revitalize wages in the North, they propose a more militant posture towards labor standards in late-industrializing countries, and urge that that posture be implemented through trade agreements. Such agreements would make access to Northern markets by companies located in the South contingent on sharp improvements in Southern labor standards.

                    ...

Are these arguments for tougher Southern labor standards compelling, or are they—as critics argue—a thin veil for protectionism? Should progressives in the South accept them, or be placed in the awkward position of resisting higher labor standards? To answer these questions, we need to be clear about the the kinds of labor standards in question. In particular, the issue is not health and safety conditions, and the right of Southern workers to be treated like human beings—not to be murdered for organizing unions, for example. These rights are inviolate, and must continue to be fought for through diplomatic channels, such organizations as the ILO, and popular protest. Rather, the standards in question focus on rates of pay—for example, minimum wage regulations, or requirements that wage increases be linked closely to productivity growth."

Arguing that the new form of globalism does not really benefit the view held by the proponents of universal international standards enforcement through international trade agreements, the article concludes:

"Against the background of this particular form of globalism, the demand for tighter labor standards in the South as a way to protect workers in the North is not only likely to harm the South but is also likely to be weak tea in the North. While demands by Northern progressives and labor activists for international income redistribution may be politically attractive with the home team, they are no substitute for aggressive policies in favor of economic expansion. Unless the growth of the global economy accelerates—as it did in the late 19th century —the problems posed by low-wage Southern competition to Northern workers promise to be enormous" 

It would be interesting to see the debate in the context of existing  WTO Agreements. Article XX (General Exceptions) of the GATT  provides countries to take certain measures under specific circumstances to further certain public policy goals. Article XX (a) is as follows:

"Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:

(a)      necessary to protect public morals;"

Can the universalisation of labour standards be argued from a standpoint of public morals? Let us take an example of a developed country which is impacted by cheaper goods from a developing country where labour standards are less stringent than its own. Can the developed country legislate banning products of countries which do not follow a certain labour standard on the grounds that using such labour standards goes against its "public morals" as it considers a certain degree of labour standards as necessary and moral. Though it would not violate the "national treatment" principle as goods produced within the developed country too must follow similar standards, is it a disguised restriction on international trade? Does it constitute veiled protectionism? Can the "public moral" standard be used to impact processes, in this case labour standards,  outside one's country? 

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.